OPEC to Keep Oil Output Steady

OPEC decided Tuesday to keep production of crude oil steady, saying its current output was enough to fuel an energy-hungry world as Iran pledged that it would not withhold its oil because of a standoff with the West over its nuclear program.

The Organization of the Petroleum Exporting Countries said the market was well supplied and reiterated that high prices had been caused by refining bottlenecks and other factors.

One of those factors has been worry over Iran, which exports more than 2.6 million barrels of oil a day and is heading for a showdown with the U.S. and some European nations that fear its nuclear program could lead to development of weapons.

OPEC President Edmund Daukoru of Nigeria said Iran, one of the cartel’s founders and its second-largest producer, had assured the group that it would not curtail its output. “I wouldn’t wish to jump to conclusions that by the mere fact of reference of the matter to the [United Nations] Security Council that we are bound to see disruptions in Iran,” he said.

Daukoru added that Iran had assured him it had never said it was going to cut production. “If Iran has not said that they will shorten production, then I don’t see why anybody should be bidding up the market.”

He said OPEC had about 2 million barrels a day of spare capacity -- in addition to its current quota of 28 million barrels a day -- should there be a need to produce more crude.

Crude for March delivery fell 43 cents to $67.92 a barrel on the New York Mercantile Exchange in seesaw trading that sent it as low as $67.64. The decision to hold output steady had been widely expected after two days of informal meetings by the cartel’s 11 members.

Jason Schenker, an economist with Wachovia Corp., said the decision and public affirmation of supply by Daukoru could help soothe a jittery public, but that world markets could take longer to gauge the effect.

“It will put people’s minds at ease, but it might not be immediately digested by the market,” he said, noting that oil prices might keep oscillating. “Some of the tension will come off the market and then we would anticipate prices to fall.”

Qatari oil minister Abdullah ibn Hamad al Attiyah said Tuesday that a cut in output would be discussed at OPEC’s March 8 meeting, noting that high oil prices now made any talk of a cut in the quota unsustainable.

“Last December we said that at the end of January we were going to cut 1 million [barrels a day]. Now, we changed our decision because of the market situation,” he told reporters. “So we’re very pragmatic.”

Saudi oil minister Ali Ibrahim Naimi, one of the most influential voices in OPEC, said Iran’s standoff with the West and the possibility that it could be referred to the Security Council for economic sanctions were not a factor in Tuesday’s decision.

Naimi said the decision to hold output steady was unanimous. But the group seemed less cohesive on the question of whether a cut might come at the next meeting in March, he said.