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OPEC set to curb oil output
VIENNA, Austria (CNN) -- OPEC ministers are expected to tighten the taps on production Thursday in Vienna in an effort to bump up oil prices that have fallen 30 percent in the past month. The cartel, which stepped up production in March to cover any shortfall caused by war in Iraq, now needs to cut output as oil from that country begins to flow back into the market. OPEC is concerned that failure to limit production could lead to an even bigger collapse in prices. At the same time, the 11-member cartel hopes to rein in over-production -- estimated to be about 1.8 million barrels a day above the official OPEC ceiling of 24.5 million barrels. The limit was set to keep prices within a target range of $22 to $28 a barrels. Brent crude for June delivery, Europe's benchmark futures contract, was down 22 cents to $25.25 a barrel in afternoon trading Wednesday in London. "I think we have to tackle compliance. Then we shall see if there is a need to cut and then we shall cut," Obaid bin Sai al-Nasseri, the United Arab Emirates' petroleum and mineral resources ministry, told reporters Wednesday in Vienna. OPEC is also faced with falling demand as warmer weather approaches, which will cut into the sale of heating fuels. "We're into the second quarter where demand falls. There's some stock building to be done, but OPEC is going to have to start fine-tuning their output," Peter Gignoux, an energy analyst at Citigroup, told CNN. Much of the focus at Thursday's meeting will be on Iraq and how much and how quickly the country can begin exporting oil. Iraq, which is still without an interim government, will not have a representative at the Vienna meeting. The U.S. military believes the Iraq's oil industry could be back to two-thirds of its pre-war capacity -- estimated at 2.8 million barrels a day -- within the next few weeks. "The most immediate challenge is to get Iraqi oil flowing into world markets and, secondly, to get its capacity sustainable and up to the level it was at before 1990," Edmund O'Sullivan, of the Middle East Economic Digest, told CNN. "That is almost certainly going to take at least 2 years, and it will take billions of dollars of investment -- money which Iraq at the moment simply doesn't have." -- CNN's Paul Hancocks contributed to this report
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