By Tom Ashby and Michael Georgy
LONDON (Reuters) - OPEC Secretary-General Alvaro Silva said on Friday that there was no shortage of oil in world markets ahead of an OPEC meeting next 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 industrialized nations that energy costs will spike this winter without more supply from the Middle East dominated group.
"The problem is not a shortage of oil," Silva told Reuters in a telephone interview from OPEC's Vienna headquarters.
Prices have risen by about 40 percent this year, largely on the back of growing fears of a U.S. attack on OPEC member Iraq, but also on OPEC curbs which began to bite early last year.
"There is no reason for concern about prices," Silva said.
The 11 members of the Organization of the Petroleum Exporting Countries, which controls two-thirds of world exports, are set to meet on Thursday in Osaka, Japan.
Silva, a former Venezuelan oil minister, said he did not expect any difficulty in finding a consensus within the cartel.
"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 North Sea Brent crude futures for November delivery up 84 cents at $28.65 a barrel, as dealers interpreted his comments to mean that OPEC would keep current limits in place for the winter.
"They wont do anything yet. They'll do a rollover and meet again in November," said Nauman Barakat, a trader at Fimat International Banque, adding that there were too many uncertainties over Iraq at the moment.
OPEC members Venezuela, Indonesia and Kuwait have all come out against any relaxation in output, while delegates say Iran is also opposed.
A meeting of OPEC technical experts this week found there was no room for a hike 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 an increase or go along with the majority view that supply quotas should be unchanged.
SAUDI TO SEEK COMMON GROUND
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.
Barakat said the statement appeared to indicate that the kingdom would go along with the majority view and hold on to current quotas, their lowest in a decade.
"The only way they can have a one day meeting is if Saudi Arabia goes along with the other members who want to leave quotas unchanged," he said.
"This looks like a rubber-stamping exercise," he added.
Asked if OPEC would replace any barrels lost by a U.S. attack on Iraq, Silva said it was difficult to know how OPEC would react.
"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 OPEC will do its best to achieve this, but I can't say what our reaction would be in a specific case," he added.
OPEC reference price stood at $27.23 a barrel on Thursday, just under the top of OPEC's $22-$28 target range.
If it rises above $28, Silva said OPEC had a mechanism to raise output automatically which could be implemented.