OPEC chief Silva sees no oil shortage

London (Reuters): OPEG Secretary-General Alvaro Silva said on Friday that there was no shortage of oil in world markets ahead of a meeting this week to decide whether to relax output curbs.

Silva said he was not concerned by oil prices, currently near their highest level in a year, despite worries in Western oil importing countries that energy costs will spike this winter without more supply.

"The problem is not a shortage of oil," Silva told Reuters in a telephone interview from OPEC's Vienna headquarters.

"There is no reason for concerns about prices," he added.

Silva, a former Venezuelan oil minister, said he did not expect any difficulty finding a consensus at Thursday's policy meeting, to be held in Osaka, Japan.

"It will be a brief meeting because we are not at our headquarters. We are planning to have a one day meeting only," Silva said.

Oil prices rallied to on Silva's comments, with Brent crude futures in London up 42 U.S. cents at US$28.15 a barrel.

Venezuela, Indonesia and Kuwait have all come out against any relaxation in output curbs, while delegates say Iran is also opposed.

A meeting of OPEC technical experts this week found there was no room for more OPEC oil this winter, because of weak demand growth and rising supply from countries outside the group.

Oil dealers are keeping a close eye on Saudi Arabia to see if the OPEC heavyweight will push for a hike or go along with the majority view that supply quotas should be unchanged.

A Gulf source said the kingdom would seek "common ground" with other cartel members in setting output policy for the fourth quarter.

"Saudi Arabia will look for a common ground on production and it will consult with other OPEC members," the Gulf source told Reuters.

Nauman Barakat, a trader at Fimat International Banque, said the Saudi statement appeared to indicate they would go along with the majority view and keep stiff curbs in place.

"The only way they can have a one day meeting is if Saudi Arabia goes along with the other nine members who want to leave quotas unchanged," he said.

"This looks like a rubber-stamping exercise," he added.

Traders say current oil prices around $28 for North Sea Brent crude are swollen by fears of war in Iraq and the oil-rich Gulf region.

OPEC reference price stood at $27.23 a barrel on Thursday, just under the top of OPEC's $22-$28 target range.

"They wont do anything yet. They'll do a rollover and meet again in November," said Barakat, adding that there were too many uncertainties over Iraq at the moment.

Asked if OPEC would replace any barrels lost by a U.S. attack on Iraq, Silva said he it was difficult to know.

"The consequences of a conflict are not known so how can we know how we would act," Silva said.

"The commitment of OPEC to the world is security of supply and it makes its best efforts for this to happen, but I can't say what our reaction would be in a specific case" he added.