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OPEC considers oil production hike
LONDON, England -- Crude oil prices continued to fall on Tuesday after the Organization of Petroleum Exporting Countries said it might boost production by 8 percent to fill a gap caused by a five-week strike in Venezuela. OPEC is expected to hike output by up to 2 million barrels a day to halt the recent surge in crude prices that has raised costs for businesses and is threatening to slow global economic growth. Both Saudi Arabia and Russia indicated on Monday they would like to see a slight rise in oil output. That announcement, along with earlier comments from OPEC officials that they were considering increased production, hit oil prices on Monday. In early trading on Tuesday, Brent crude for February delivery -- the benchmark oil futures contract on the International Petroleum Exchange in London -- was down 60 cents to $29.60 in late trading. The price for Brent, the benchmark for two-thirds of the world's oil, has jumped 35 percent in the past year. "There is a plan being circulated now to increase production by between 1.5-2 million barrels per day," a senior OPEC delegate from a key producer told Reuters in Dubai. "The increase will take place immediately after the decision is made -- and we are not far from that now. Discussions have already started," he said. "This plan is supported by Saudi Arabia and others." OPEC kingpin Saudi Arabia is the world's largest oil exporter, while Russia is No. 2 and -- along with other major producers like Mexico and Norway -- is not a member of the cartel. Venezuela, which has seen its petroleum industry almost grind to a halt since the anti-government strike began on December 2, is the world's fifth largest oil exporter -- providing the United States with about 20 percent of its energy requirements. The U.S. said last week its crude supplies were now being affected by the strike. Oil prices have also been pushed to two-year highs by threats of a possible war with Iraq, which many fear could limit shipments from the oil-rich Gulf region. OPEC has pledged to raise supplies if prices stay above the top end of its $22-$28 price band for 20 working days. The extra oil will come as long as prices don't fall sharply in the next 10 days. "The plan to increase supplies is in light of the shortage from Venezuela and a sharp drawdown in global stockpiles," the OPEC delegate told Reuters. "And there is a strong desire within OPEC not to have a high price which might harm world economic growth, especially in developing countries." Oil prices have since shot beyond $30 a barrel -- near two-year highs -- amid political turmoil in Venezuela and fears that a U.S. military strike on Iraq could disrupt exports from the Middle East.
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