Venezuela accepts Iraq’s delegates to OPEC “with reservations”. OPEC cuts output

After intense negotiations lasting until the dawn of this Wednesday in search of a consensus, the Venezuelan delegation to OPEC accepted -under protest- the participation of a delegate of the Iraqi provisional administration to the OPEC meeting.

Venezuela’s reservations were based on the fact that the Iraqi government has not been officially recognized by the United Nations, and that according to OPEC’s own Statues, the cartel is made of representatives from the governments of its member countries.

“It is clear enough the governmental character of the different delegations that concur in representation of their countries to ordinary and extraordinary meetings of the organization,” says an official statement by the Venezuelan delegation, citing articles 1 and 3 of OPEC’s Statues.

“This is only a position of principles that in no way implies judgment of values of the respectable Iraqi citizens who have attended this Conference. For that reason we recommended maintaining the relations between the Republic of Iraq and OPEC,” read the statement.

Mines and Energy Minister Rafael Ramirez said today that Venezuela was hoping for an international recognition of Iraq’s interim government, before allowing their delegates to participate. Ramirez said the Venezuela had to compromise on the matter in order to avoid a crisis inside OPEC.

According to analysts, the increase of oil production in Iraq, months after the American-led invasion brought it to zero, is now impossible to ignore, and for OPEC it is better to have Iraq back into the cartel even without having a legally recognized government.

A non-official translation of a document describing Venezuela’s position on the matter titled “Declaration of the Delegation of Venezuela to the 127th Ordinary Conference of OPEC September 24th, 2003” can be found at www.venezuelanalysis.com/docs.php?dno=1002

Surprise cut

In a very controversial and surprising move, OPEC delegates decided this Wednesday to cut the cartel’s overall oil production by 900 thousand barrels a day. This leaves OPEC’s output at only 24.5 million barrels per day. The effects have been felt immediately though the financial and commodity markets, which did not expect a production cut from OPEC’s 127th Ordinary Conference, but rather a discussion on the status of occupied Iraq as a member.

The coming to power of Hugo Chavez in Venezuela played a key role in the rebuilding of OPEC, after prices dropped into the single digits at the end of the 90s. Under Venezuela’s leadership, today’s OPEC is very different from that of the past in which virtually all member countries violated production caps imposed by the cartel.

The discipline of OPEC’s member countries by maintaining oil production within the cartel’s assigned quotas, has surprised and angered consuming countries, as OPEC has managed to keep prices at a level “that’s fair for both producers and consumers”.