ARABS-OPEC - Feb. 2 - Cartel May Cut Output In Spring.

UAE Oil Minister Obaid Bin Saif Nasseri says in Abu Dhabi: "We [OPEC] definitely are concerned for the second quarter, because typically demand declines during that period. If we see the danger of a drop in oil prices, we will meet to rectify the situation". Libyan Oil Minister Abdulhasid Mahmoud Zlitni says: "If in March there are signs that demand is stable and prices decline sharply, OPEC will react to reduce production. The current build-up in global oil stocks will have a negative impact on prices". (Saudi Oil Minister Ali Naimi and his Qatari counterpart and OPEC Pres. Abdullah Bin Hamad Attiyah said on Feb. 1 that supply might exceed consumption by as much as 3m b/d after the Northern Hemisphere winter ends. Most OPEC members are now pumping near their limit in an attempt to lower prices from more than $31/b in New York and London, a two-year high. Prices have surged two-thirds in the past year because of a strike in Venezuela, traditionally OPEC's No. 3 producer, that has crimped that country's oil output, as well as concern over a possible US-led attack on Iraq. Oil prices in New York have held above $30/b for six weeks, the longest period in two years. A drop of $5-10/b would ease pressure on economies in the US and Europe, where growth has slowed and oil demand has stagnated since 1999. Nasseri said the 11-member cartel may struggle to replace Iraqi oil should the country's production be curtailed by an attack. Only Saudi Arabia and the UAE hold significant spare capacity. Nasseri said: "If there is a total disruption of oil infrastructure in Iraq, it will be very difficult for OPEC to replace that production". Iraq pumped 2.3m b/d in Dec. 2002, making it OPEC's third-largest producer, according to Bloomberg estimates. Ali Naimi said: "We will supply the shortages up to our capacity, whatever the source of the shortage". The kingdom has 2-2.5m b/d of idle capacity, he said).