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OPEC maintains oil output, hands quotas to Angola, Ecuador

Business Materials 5 December 2007 19:48 (UTC +04:00)

( AFP ) - OPEC - which supplies about 40 percent of the world's oil -- maintained its output levels at a key ministerial meeting on Wednesday and handed production quotas to new members Angola and Ecuador.

The Organisation of Petroleum Exporting Countries, which comprises 13 nations, added that it would hold an extraordinary meeting on February 1 in Vienna after deciding against an output hike in Abu Dhabi amid sky-high oil prices.

Angola, which joined the cartel on January 1, was handed a quota of 1.9 million barrels of oil per day. Ecuador, which rejoined OPEC last month, was given a daily quota totalling 520,000 barrels.

It was not immediately clear when the pair would begin operating their quotas, or if their output would be in addition to OPEC's official output daily output of 27.25 million barrels.

Ahead of the latest output decision, OPEC member Venezuela said a hike to production would risk igniting further heavy losses for oil prices.

Before the OPEC call, crude futures had tumbled by about 10 percent since striking a record high of 99.29 dollars a barrel on November 21.

High oil prices are bad news for consumers, who must pay more for motor fuel and energy bills. But they benefit energy producers, who see their profits rocket.

OPEC decided to maintain output after considering a hike of half a million barrels, and amid forecasts that oil demand would fall because of current global economic weakness.

Any hike would have been a "gesture" to the oil market which holds the cartel responsible for soaring crude prices, an OPEC delegate had said Tuesday.

Saudi Oil Minister Ali al-Nuaimi, speaking Wednesday, said OPEC had no need to change crude production.

"There is nothing that justifies an increase or a decrease," Nuaimi told reporters at the start of the OPEC meeting in Abu Dhabi. Saudi Arabia is OPEC's most influential member and the world's biggest producer of crude.

Ramirez added: "If we increase the production now, perhaps we will cause the oil price to collapse."

Kamel al-Harami, an independent Kuwaiti analyst, said the 13-member organisation wanted to keep output steady because an increase in production "could negatively impact oil prices, especially after they have dropped more than 10 dollars" since late November.

OPEC appears to have reached a consensus over output after overcoming differences.

On Tuesday, Saudi Arabia had refused to spell out its intentions but said all options were on the table. Nigeria, Africa's biggest crude producer, had expressed the same sentiment but on entering Wednesday's meeting said it saw no need for a hike.

OPEC is concerned that an increase in production would oversupply the market during the second quarter, when demand for crude tends to fall as winter passes in the northern hemisphere, analysts said.

They are also worried that global economic weakness caused by the US housing crisis and credit crunch could dampen demand for energy.

OPEC last decided to raise production in September when it agreed to provide the market with an extra 500,000 barrels of oil per day. The increase took effect on November 1.

OPEC comprises Algeria, Angola, Ecuador, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.

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