As MEED went to press, all the signs were that OPEC would leave its 25.4 million barrel-a-day (b/d) ceiling unchanged. OPEC President and Qatari Minister of Energy & Industry Abdullah bin Hamad al-Attiya and Saudi Petroleum & Mineral Resources Minister Ali Naimi have both indicated they see no need for immediate supply cuts. 'The likely outcome is that the meeting will maintain the production ceiling as it is at present,' said UAE Petroleum & Mineral Resources Minister Obeid bin Saif al-Nasseri on 27 July. 'The market is relatively stable and has moved in a narrow band of $3, which is inside the price band of $22-28 per barrel, only briefly going over the top end of the ceiling.'

Iraq's recovery has accelerated in recent weeks, with term contracts signed assuming exports of at least 645,000 barrels a day (b/d) in August, 200,000 b/d more than the July average.

However, the situation remains too uncertain to form the basis for an immediate OPEC production cut. 'We don't want to overextend ourselves on volume,' said a Iraq State Oil Marketing Organisationofficial on 29 July. 'We are sure we can handle about 650,000 barrels a day.' This compares with pre-war output of some 2.1 million b/d. Exports have yet to resume from the northern Kirkuk fields because the pipeline to the Ceyhan export terminal remains out of action. Total production at the northern fields stands at about 550,000 b/d, but the needs of local refineries will leave only some 300,000 b/d available for export. Security also remains precarious.

'The ministers know they will have to cut production sometime, but that decision will keep getting postponed until Iraq is consistently back on the market,' says one London-based analyst. 'Crude oil inventories are especially low in the US and overall oil storage figures for the OECD are barely adequate.'

US stocks achieved a 1 million-barrel build to 277.3 million barrels in the week to 25 July, narrowing the deficit from the corresponding period in 2002 to 9.8 per cent. Crude imports increased to 10.1 million b/d. Basra Light should begin hitting US shores in August, hard on the heels of plentiful supplies from West Africa and the North Sea.