OPEC raises oil production quotas
ISFAHAN, Iran -- OPEC members agreed in a closed session Wednesday to immediately increase oil production quotas by a half-million barrels per day in an effort to cool down rising oil prices, according to the oil ministers from Libya and Nigeria.
OPEC will consider another 500,000 barrel per day hike next month if oil prices remain high, the ministers said.
Speaking before the meeting, influential Saudi Oil Minister Ali al-Naimi said Riyadh was aiming to bring crude back into a $40-$50-a-barrel range, the first time the world's biggest oil exporter has advocated support for prices that high.
"Current oil price levels of $55 are high and we want prices to be between $40 and $50 a barrel," Naimi told the London-based Arabic-language Al-Hayat newspaper.
U.S. crude eased 60 cents in Wednesday trade in Asia to $54.64 a barrel.
Oil traders are more interested in what the deal will mean for real extra output from the cartel, most of whose members are already pumping at or close to full capacity.
Naimi said his plan would mean output including leakage of about 700,000 bpd over formal OPEC limits would rise from 27.7 million to 28.2 million bpd.
He said Riyadh had already raised production by 250,000 bpd in anticipation of the deal. Kuwait said it could add 120,000 bpd.
With Iraq not subject to an output quota, pumping about another 2 million bpd, that would put total OPEC supply back above 30 million bpd and close to September's 25-year production high.
The Saudi minister has already committed Riyadh to raising production further in the second half of 2005 to meet another year of strong world fuel demand, fed by China's rapidly expanding economy.
Fears among consumer countries are that producers will struggle to cope with demand gains later this year, stretching the world supply chain and forcing prices higher.
World crude consumption is expected to hit 86.1 million bpd during the seasonal demand peak of the fourth quarter, up from 83.7 million bpd on average for the first nine months of 2005, according to projections from the Paris-based International Energy Agency.