OPEC oil ministers are likely to reject calls for an output increase when they meet in Osaka, Japan this week, the Centre for Global Energy Studies said today.
"Although the oil market is slowly tightening for fundamental reasons, as the impact of OPEC's January cut and the loss of Iraq oil finally work their way through, prices are being boosted by fear of a war in Iraq and the demand outlook over the coming winter remains highly uncertain," the energy consultancy said.
With production by the 10 members of the Organisation of Petroleum Exporting Countries (OPEC) - excluding Iraq - running two million barrels per day above quota, there was plenty of room for an increase in the cartel's output ceiling to legitimise the over-production, it said.
"However if OPEC wishes to keep oil prices in the top half of its target range [of $22-$28 per barrel] over the winter, there is not much room for an increase in physical supplies until the beginning of 2003," the centre said in its monthly oil report.
"The organisation attributes high prices to political factors and we therefore do not expect OPEC to raise quotas in Osaka."
Some OPEC members such as Venezuela, Indonesia and Kuwait and Qatar are pushing for current output levels to be maintained at the formal meeting on Thursday, while others such as OPEC heavyweight Saudi Arabia are thought to be swaying towards a modest increase.
Reference Brent North Sea crude for November delivery slipped 20 cents to $28.47 a barrel in afternoon London trading on Monday, giving back some of its strong gains from the previous session.
AFP