OPEC is ready to pump extra oil in the event of any supply disruptions caused by Iraq and its biggest producer, Saudi Arabia, can ramp up to capacity if needed, oil officials said on Tuesday.
For now the market is well-supplied and prices above $114 a barrel are the result of market nervousness, OPEC Secretary General Abdullah al-Badri said.
An official from Saudi Arabia, the only OPEC member with significant spare capacity, said it was committed to supplying the market if needed.
Saudi Arabia, which produces around 9.7 million bpd, has the ability to pump to its full capacity of 12.5 million bpd, the official told Reuters.
The Organization of the Petroleum Exporting Countries earlier this month agreed to keep its output ceiling unchanged at 30 million barrels per day (bpd).
Since then, concerns that violence in Iraq could disrupt supplies have stoked volatility and driven international benchmark Brent above $114 a barrel.
"The ongoing uncertainty means that no sharp price slide is likely,"' said Carsten Fritsch, analyst at Commerzbank. "In the next few weeks, we expect to see Brent trading at above $110."
Disruption in Iraq would aggravate the impact of outages in Libya, Syria and sanctions on Iran, which have already curbed production by almost 3 million bpd, or more than 3 percent of daily global demand.
In Libya, where unrest has crippled oil output, an oil port that reopened at the weekend closed again and production is around 270,000 bpd, a fraction of the 1.6 million bpd it produced before the 2011 civil war.
Badri said he understood there was no production problem so far in Iraq. Production in the south of the country was mostly intact, he said.
“As of now what we see in the price today is not because of any shortage of supply. The market is well-supplied,” Badri told reporters, adding that OECD commercial stocks stood at 57.5 days of forward demand. He declined to give a figure on OPEC's spare capacity.
Badri was speaking in Brussels, where he took part in the latest regular round of EU-OPEC dialog, an exchange of producer-consumer views.
He also said there was no reason for now to call an emergency OPEC meeting, although the producer group was willing to step in if needed.
Aside from geopolitical supply risks, investors will focus this week on the latest surveys of U.S. oil supplies.
A Reuters survey forecast U.S. crude inventories fell 1.3 million barrels on average last week, while product stockpiles rose.