Vienna (Platts)--9Sep2008

OPEC ministers meeting in Vienna later Tuesday are widely expected to
leave official output targets unchanged at a collective 29.673 million b/d.
But it was unclear, after Saudi oil minister Ali Naimi described oil markets
as being in balance, whether there would be a collective agreement on reining
in the group's excess production beyond the official limit.

A key OPEC panel, the ministerial monitoring committee, which met late
Monday, will call for tighter discipline.

Iran, which chairs the committee, has being particularly vocal about the
need for increased compliance.

Other ministers, including OPEC's Algerian president Chakib Khelil, have
expressed concern that excess supply is building at a time when demand for
OPEC crude is forecast to fall.

Saudi oil minister Naimi, arriving in Vienna early Tuesday, said markets
were "fairly well balanced" and the kingdom had worked "very hard" since June
to bring oil prices down to their current levels.

"The market is fairly well balanced and we have worked very hard since
the June meeting to bring prices to where they are now," Naimi said, when
asked to comment on the calls for stricter adherence to OPEC's official
targets.

"I think we have been very successful," he added, referring to the more
than 30% fall in oil prices since a peak of more than $147/barrel in early
July.
"I will leave the conclusion to you but I think everything is in balance.
Inventories are in a healthy position," he added.

Asked whether Saudi Arabia, OPEC's biggest oil producer and the most
influential member of the 13-member group, had cut back on its production in
August from July levels, Naimi repeated the kingdom's position to supply all
its crude oil customers with their needs.

"We will do what I have said before. We have customers and we will
satisfy their demand ... whatever our customers want we will satisfy," Naimi
said. He did not provide a production figure for August, referring reporters
to the Joint Oil Data Initiative (JODI) web site.

JODI data, which are submitted directly by countries participating in the
initiative, shows Saudi crude output at 9.512 million b/d in June. It does not
yet include information for July and August.

Saudi Arabia raised its crude output over several months as oil prices
climbed to the record levels of early July, saying it was responding to
customer demand. A Platts survey of OPEC and oil industry officials earlier
Tuesday showed Saudi output at 9.67 million b/d in August, slightly down from
the July estimate of 9.7 million b/d.

Washington-based analysts PFC Energy said in a note to clients that OPEC
had agreed in principle to remove some of the oversupply above the official
targets, but that the formal statement to be released after the meeting was
unlikely to include numerical targets for cuts.

"PFC Energy has learned that OPEC has in principle agreed to trim
production from current levels above official output targets," it said. "PFC
Energy understands that a cut in actual production could be [in] the order of
500 million b/d, but that the communique text will likely focus on the need to
abide by agreed-upon production targets rather than on numerical targets for
cuts."
OPEC is next scheduled to meet on December 17 in Oran, Algeria, but PFC
said OPEC could call a meeting in November at which it would review output
targets.