Iran-Iraq Flare-Up Sours Mood at OPEC Meeting

GENEVA —  Developments in the Middle East on Sunday soured the atmosphere at an OPEC meeting struggling into its second week with oil ministers trying to fix new output quotas and so send prices higher.

The major activity affecting the talks, which are crucial to whether oil prices rise or fall, took place Sunday far from the Geneva meeting of the 13-member Organization of Petroleum Exporting Countries.

Tehran reports had Iranian parliamentary speaker Ali Akbar Hashemi Rafsanjani linking a raid that Iran says it staged on fellow OPEC member Iraq’s big Kirkuk oil installations with the meeting.

He called the raid a timely move “in view of the current OPEC meeting and the subversion by the Iraqis and the Kuwaitis of the effort to raise oil prices.”

Delegates here said Kuwaiti oil minister Ali Khalifa al Sabah, a key OPEC protagonist, was angered by reports of the speech.

And in Kuwait itself, the cabinet issued a statement endorsing a demand that Ali had made at the OPEC meeting for a new oil production quota for Kuwait. He says the share of the market now set by the cartel for Kuwait is unfair.

The Kuwaiti demand, which delegates say may be tacitly backed by Saudi Arabia, forced the OPEC meeting to undertake the tortuous process of trying to reallocate output quotas to defend and try to raise prices in the current glut.

An OPEC majority, including Iran, had earlier tended to favor simply extending a temporary, makeshift agreement on production curbs beyond its Oct. 31 expiration date. Kuwait has 900,000 barrels daily out of an OPEC total of about 17 million under that deal.

“The cabinet stresses the importance of reallocating the output quotas as of next Nov. 1,” the Kuwaiti cabinet said in a powerful endorsement of Ali’s stand here.

Also away from Geneva, OPEC President Rilwanu Lukman addressed a seminar Sunday in Rimini, Italy, where he told reporters that the current oil price of about $14 a barrel was “dangerously low” and reiterated the goal of getting it to $20 by the end of the year through output curbs.

With ministerial sessions recessed, technical delegates toiled over the weekend to agree on some criteria to help the ministers try to set output quotas without which prices could plunge below $10 again.