* OPEC agrees to keep ceiling unchanged
* Saudi Arabia sees balanced market
* Iraq fears join Libya and Iran supply uncertainty
By Rania El Gamal and Alex Lawler
VIENNA, June 11 OPEC sailed through a brief,
calm meeting on Wednesday - even as oil prices rose to $110 on
barrel on concern renewed strife could hit Iraq's output and
deepen a supply shortfall from chaotic Libya and sanctions-bound
Oil ministers painted a soothing image of good supply, and
prices beneficial to all, although some among them struggled to
eke out exports.
Consuming nations might bank on sharply higher supply from
Libya, Iran and Iraq, on the basis of their bullish estimates of
future exports this week - but only once they have put present
troubles behind them.
The Organization of the Petroleum Exporting Countries, which
pumps more than a third of the world's oil, agreed, as expected,
keep its 30 million barrels per day output ceiling unchanged for
another six months.
"The customer is happy, the producer is happy, the consumer
is happy, everybody is happy, the market is in balance,
everything is good, this is the best time," Saudi Oil Minister
Ali al-Naimi said.
A relaxed Naimi interrupted a vacation to appear in Vienna
on the morning of the meeting.
OPEC's meeting in December 2013 was shadowed by the
prospect of a rising tide of output from resurgent Iran and Iraq
giving the group a headache for the next year.
Six months on that wave of oil looks no nearer, with concern
veering to shortfalls rather than gluts, and the shock of events
in Iraq troubling delegates more behind the scenes.
Even as Iraq's Oil Minister Abdul Kareem Luaibi sketched out
plans to boost output in OPEC's second biggest producer, Sunni
Islamist insurgents in the north seized control of Mosul -
Iraq's second city and pressed on to Iraq's biggest oil
refinery at Baiji.
Luiabi stressed a bomb attack had already knocked out Iraq's
northern export pipeline.
"All our exports now are from the Basra terminal in the
south - and it's a very, very safe area," Luaibi said.
OPEC would naturally look to Saudi Arabia's spare capacity,
the largest in the group, to cover a greater loss of Iraqi oil
but with the kingdom currently producing 9.7 million bpd a
sustained stretch of perhaps an additional million may prove a
strain, delegates said.
Saudi's record output stands at 10.2 million bpd, although
it could count on some support too from Kuwait and the UAE.
The world's top exporter will be pumping harder in any case
given higher domestic consumption during the summer months.
OPEC has weathered conflicts before, even between its
members, but has so far been fortunate that the headwind of
exports lost to Libya's civil strife has been eased by rising
output elsewhere, most notably by the boom in U.S. production.
"The most important in this process is Libya," said OPEC
Secretary-General Abdullah al-Badri. "The other ones - the
production will increase gradually."
Analysts said the outages, while not representing an
emergency yet, meant there was no room for other serious
"The U.S. shale story has given the market a false sense of
security," said Yasser Elguindi of Medley Global Advisors.
"The best case scenario this year is for a balanced market.
There is no room for further supply deterioration."
Libya's Oil Minister Omar Shakmak was candid about prospects
for reopening export ports and output shut in by the chaos of
"It's out of our control what's happening," he said. "It's
out of the control of the oil and gas sector."
Output could bounce back to close to normal around 1.4
million bpd in nine months if order were restored, Shakmak said,
but was currently trickling out at not much more than a tenth of
Iran also vowed a quick return to the centre stage as a
leading producer, but only once international sanctions over its
nuclear programme are withdrawn.
Oil Minister Bijan Zanganeh said Tehran could increase oil
exports by 500,000 barrels per day immediately after any lifting
"Very quickly we can increase by half a million and after a
couple of months we can increase it to 700,000 barrels per day,"
But in Geneva talks, progress on solving the nuclear impasse
and allowing Iran to export more oil looked stickier. They could
extended for six months if no deal is reached by a July 20
deadline agreed by all parties.
OPEC has raised its 2014 demand forecast 29.76 million bpd,
comfortably inside its ceiling, but the International Energy
Agency, representing the United States and leading
industrialized oil consumers, sees a tighter fit of around 30
(Additional reporting by Peg Mackey, Georgina Prodhan and
Veronica Brown, editing by William Hardy)