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OPEC Tries to Prevent Crash in Oil Prices - 2003-04-23

The Organization of Petroleum Exporting Countries is holding a special meeting intended to prevent a surprise crash in global oil prices. Also being discussed is who, if anyone, will represent Iraq at the session.

OPEC ministers meet in Vienna on Thursday to decide how best to react to what one source called a dangerous fall in prices on the world market. OPEC's announced aim is to stabilize prices at around $25 per barrel.

Ehsan Ul-Haq, an analyst for PVM Oil Associates in Vienna, says the cartel is considering a cut in production to 24.5 million barrels per day. "But as always it will be Saudi Arabia that will be acting as a swing producer," he said. "They produced more in the past few months; firstly because of problems in Venezuela and then after because of problems in Nigeria and in Iraq and they have been producing more than nine million barrels per day."

Saudi Arabia is being urged by countries such as Indonesia to stick to agreed production limits.

Another problem facing OPEC is how to reintegrate Iraq without destabilizing the market. Iraq is a founding member of the oil cartel, but has been excluded from OPEC's quota export system for the past 11 years because of U.N.-imposed sanctions.

On the eve of OPEC's Thursday session, there still was no indication as to who, if anyone, would attend as Baghdad's representative.

OPEC sources said an invitation to attend the meeting in an observer capacity had gone out to the Iraqi embassy in Vienna. The head of the embassy had attended the last two OPEC meetings.

Meanwhile in Iraq, oil began flowing through that nation's pipelines for the first time since the start of the war. U.S.-led engineers started the flow at a storage facility outside the southern city of Basra.

But hundreds of wells across Iraq remain inactive and could take weeks or even months to come back online.

Time is becoming important. Analysts say Iraq needs to resume oil production to pay for reconstruction costs that could run into billions of dollars.