OPEC ministers, meeting in Vienna on 8 March, had been widely expected to leave quotas on hold at 28 million barrels a day (b/d). Even so, its decision calmed the market. The group's closing communique attributed the rollover chiefly to geopolitical factors - namely in Iran, Iraq and Nigeria - keeping prices high. It also made reference to downstream bottlenecks and the impact of more stringent US fuel standards. An extraordinary meeting was scheduled in Venezuela on 1 June to review the situation.

Actual OPEC output - including Iraq - is running at about 30 million b/d, while the OPEC 10 are producing slightly above the 28 million-b/d ceiling. 'The two immediate key swing factors in the path of actual OPEC output appear to be Nigeria and Iraq, and the key medium-term uncertainty is Iran,' says Paul Horsnell of Barclays Capital. 'The apparent inability of the central government to reinforce and stabilise its position in the Niger Delta this year leads us to remain deeply pessimistic about the prospects for Nigerian output over the course of the next year.

'In Iraq, one might think that it would be hard for matters to get much worse, but that seems to be what is happening.' About 550,000 b/d of Nigerian output remains shut in due to militant attacks. Nigerian Oil Minister and OPEC president Edmund Daukoru said in Vienna that the bulk of the lost production should be back on line within weeks, but further attacks have been threatened.

Aside from the OPEC meeting, the other factor pushing prices down was US inventory data, released on the same day. Crude stocks built by an unexpectedly large 2.1 per cent to 335.1 million barrels in the week to 3 March. Gasoline supplies fell by 0.5 per cent to 224.8 million barrels.