OPEC rejects West's call to boost oil output

OSAKA, Japan -- OPEC ministers decided Thursday to keep oil production levels unchanged through year's end, despite calls from the West for more output and fears a U.S war on Iraq could disrupt supplies.

Consuming nations had lobbied for an increase in output to cut rising fuel bills, but OPEC figured the market is adequately supplied and any increase in price has been based on a "war premium" whipped up by Washington's saber-rattling about toppling Iraqi President Saddam Hussein.

"I think they are political prices, not market prices," said Qatari oil minister Abdullah bin Hamad al-Attiyah, who was named Thursday as the new OPEC president.

OPEC's most important player, Saudi Oil Minister Ali Naimi, said oil is now at a good level for buyers and sellers alike, adding he would like to see its price average $25 per barrel, a "magic number" slightly below the current level, but more expensive than oil has been for most of this year.

OPEC maintained its official supply ceiling of 21.7 million barrels per day, which is being boosted by up to 2 million barrels daily as most members cheat on their individual output quotas.

In an acknowledgment of concerns that high prices could prove damaging to oil-importing nations, the ministers said they would gather again on Dec. 12 at OPEC headquarters in Vienna to take a fresh look at the market.

OPEC pledged more oil would be pumped if the price moves too high, with some saying they would watch closely for any action against Iraq that might lead to supply shortages, or hoarding by consumers that could nudge prices upward.

"We'll have to follow the developments and act accordingly," said Nigeria's presidential oil adviser, Rilwanu Lukman. "We have to keep our wits about us."

Lukman said OPEC would raise production if the price breaks out of its target range of $22 to $28 per barrel. Premium grades of crude traded on the New York and London futures markets have been higher than that lately, but OPEC said its benchmark price was just $26.92 on Wednesday.

Consumers, including the United States, are worried tight supplies heading into the peak demand season could make oil cost even more, but many in OPEC think prices have been pushed higher by fears President Bush will decide to attack Iraq to oust Saddam -- not by any imbalance in the market.

OPEC also said the world economy is expected to show only modest growth in the near term, which is unlikely to do much for demand.