ARABS-OPEC - Sept. 19 - Cartel Agrees To Leave Production Quotas Unchanged.

OPEC ministers agree to leave production quotas unchanged, with Kuwaiti Oil Minister Shaikh Ahmad Al Fahd Al Sabah saying: "We will continue with the same production as we have now". (Analysts say the move will keep oil prices high and could send them even higher in the event of military action against Iraq). Saying there was enough oil in the world market, most of the cartel's 11 ministers prevailed over Saudi Arabia - the organisation's dominant producer. The Saudis were leaning towards increasing formal output quotas. UAE Oil Minister Obaid Bin Saif Al Nasseri said: "At the moment there is no justification for an output change". Generally, OPEC has not been impressed by recent warnings from the International Energy Agency that the cartel should put more oil into a steadily tightening market. Most OPEC producers have argued that the tightening is artificial, with the oil price skewed because it includes a war premium of at least $3-5/b. But the latest evidence from falling US inventories is that oil demand may be exerting more of a strain on supply than OPEC has been claiming. This may have been behind Riyadh's desire for a modest increase in cartel quotas. Another factor is Riyadh's concern over cartel credibility. (Quota-cheating, an OPEC habit, has recently been very useful. So far this year, according to the IEA, Iraq's 10 OPEC partners have quietly raised production by a further 740,000 b/d, offsetting the 700,000 b/d fall in Iraqi exports over the same period. But this brings total quota-cheating to nearly 2m b/d, a dangerously high level of indiscipline, according to Saudi Oil Minister Ali Naimi. In some circumstances, Saudi Arabia might have tried to impose its will on the smaller producers).