OPEC bids to calm fears

LONDON, England -- OPEC ministers have made a pledge to keep world oil supplies flowing and prices from soaring after Iraq halted exports on Monday.

Although the Organization of Petroleum Exporting Countries offered no details about how it would make up for Iraq's withdrawal from the market, crude prices -- that had initially shot higher -- lost gains as it became apparent OPEC would not allow a shortfall to occur.

Oil analyst for Commerzbank, Clay Smith, told CNN: "OPEC will fill the short fall, unofficially, and the market won't feel the difference."

Iraq -- which produces nearly five percent of world exports -- ceased oil exports on Monday in protest against the United Nations oil-for-food programme being renewed for one month instead of the usual six.

Suspension of Iraq's oil exports triggered a wave of panic buying. Brent crude futures for July delivery rose 43 cents to $29.50 a barrel in Monday morning trading on the International Petroleum Exchange in London.

OPEC president Chakib Khelil took the lead in trying to reassure markets.

"We're going to make sure that demand is met," he said. "I'm not worried."

OPEC -- which produces 40 percent of the world's oil needs -- is scheduled to meet in Vienna on Tuesday to fix supply quotas for the third quarter.

It is meeting as motorists in the U.S. face stiff prices at the pump, with motorists in some places paying more than $2 a gallon for gasoline.

Some analysts said the worst of the summer's high gas prices may already be over.

"There is no shortage of crude oil. There has been pressure on U.S. gasoline prices because of a lack of stock. It has nothing to do with OPEC," Smith said.

Gasoline imports are flooding into the U.S. now and its refineries are operating at 96 percent, chief economist of the Center for Global Energy Studies in London, Leo Drollas, told the Associated Press.

The UN's one-month renewal of the oil-for-food programme was meant to give it time to consider an Anglo-American proposal lifting restrictions on civilian goods imports but placing tighter controls on military-related supplies and oil smuggling.

The 11-year-old sanctions are a legacy of the Gulf War. Iraq wants all sanctions lifted.

Iraq was continuing its permitted sales to neighbours Turkey, Jordan and Syria this week.

OPEC's leading producer, Saudi Arabia, is the only cartel member that is able to quickly make up for the loss of Iraq's oil, as most of the group's other members are pumping at or near their limits.

OPEC has an official output target of 24.2 million barrels a day. Its members pump about two-fifths of the world's crude oil.

Obaid bin Saif Al-Nasseri, oil minister for the United Arab Emirates, said OPEC has not ruled out increasing output if the situation warrants.

"But we still have to study further -- it's too early to give a clear response," he said.