VIENNA // Consumers baulk at oil prices above the psychological barrier of US$100 a barrel, and the world's top crude exporter, Saudi Arabia, declares its ideal price lies below that. Not so Iraq.
Between $100 and $120 is just dandy, according to the country's oil minister Abdul Kareem Luaiby. It is easy to see why, given the $7 billion (Dh25.71bn) Iraq says it took in from oil exports last month alone. "The current price is not too high," he said. "There are many economists worldwide who suggest that the current level does not hurt the world economy."
The minister was in Austria for today's Opec meeting, expected to be the most contentious for years as the organisation that controls more than 40 per cent of the world's oil supply meets for the first time since unrest began spreading across the Middle East.
Concern about potential supply disruptions, actual cuts from Opec member Libya and the nuclear disaster in Japan have sent the price of oil up to $127 in recent weeks. Brent crude, the European benchmark, was trading at $115 yesterday.
In the days leading up to the meeting, Opec members have aligned themselves into two camps: those who believe it should increase output to curb prices and sustain the global economic recovery, and those who do not.
Iraq appears to side with the latter. By contrast, King Abdullah of Saudi Arabia, the world's petroleum superpower, declared $75 to be a fair price for oil in 2008 and has stuck to that target since.
Iraq has a unique position among Opec nations, with the right to provide input at meetings but without any obligation to stick to a quota. It is at least a couple years away from coming under the system that caps the official production of members under a collective ceiling at 24.8 million barrels a day (bpd), analysts say.
Until then Iraq can continue pumping as much as it can to attract the foreign investment required to develop new fields and export facilities. Recently it hit output of 2.7 million bpd.
Luckily for the rest of the world, Iraq's line on prices appears to be in a minority. The GCC, which constitutes the most powerful lobby within Opec, is pushing to bring prices down. Analysts expect the GCC to win the day.
"Led by the GCC, Opec is likely to increase production because the market needs more oil," said Gary Ross, the chief executive of PIRA Energy, a New York consultancy.