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Opec chief wants to increase production Original Source Link: (May no longer be active)
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OPEC Chief May Start Quota Hike Talks Sun
Sat Apr 2, 2005 09:17 AM ET
By Haitham Haddadin
KUWAIT (Reuters) - OPEC's president said he was likely to start telephone consultations with cartel oil ministers on Sunday on increasing production quotas by a further 500,000 barrels per day to help cool surging oil prices.
Sheikh Ahmad al-Fahd al-Sabah, who is also Kuwait's energy minister, said he believed the additional oil supplies were likely to hit markets by the start of next month at the latest.
"I think the talks start tomorrow," Sheikh Ahmad told Reuters on Saturday on the sidelines of the two day EuroGulf Energy Forum in Kuwait City.
The Organization of Petroleum Exporting Countries lifted its output ceiling by 500,000 bpd to 27.5 million bpd in mid-March and said it would consult on whether to increase formal quotas by a further 500,000 bpd if oil prices continued to rise.
In recent days, OPEC has said it would wait before enforcing a second quota increase. On Tuesday, Sheikh Ahmad said OPEC did not need to increase oil production now but would wait to raise supply more by than 1 million bpd for the third quarter.
But by Friday, oil prices had surged to a record near $58 a barrel in the United States, powered by fears over slipping U.S. gasoline stockpiles and a forecast that the prices could spike above $100 due to robust global demand and tight spare capacity.
"We had suspended (our consultations) for a period of time because of the decline in prices," Sheikh Ahmad said.
"But now, the reality of prices requires that we once again undertake communications for the purpose of consultations with the fellow OPEC oil ministers ... pertaining to the 500,000 bpd hike."
Top energy derivatives trader Goldman Sachs (GS.N: Quote, Profile, Research) said in a report the oil markets might have entered a "super-spike" period, which could eventually drive prices toward $105.
Asked when the actual hike was likely to be decided, Sheikh Ahmad said: "It will depend on our agreement with the OPEC members, but I expect that by the end of April or the start of May, the increase will be there; the increase will actually be in the market."
Abdullah al-Attiyah, the oil minister of OPEC producer Qatar, had said on Wednesday that he saw little likelihood that the cartel would boost production ahead of its June meeting.
Kuwait's state news agency KUNA quoted the OPEC chief as saying oil exporters and importers should work together to rein in prices.
"Cooperation between exporting and importing countries in finding suitable solutions for this rise will help curtail it," he said, adding oil exporters were keen to meet global demand.
"The oil industry is facing increasing challenges in terms of guaranteeing power sources, oil market instability and the unprecedented hike in prices, all of which call for cooperation between producers and consumers to maintain market stability and provide oil at suitable prices."
Discussions at the EuroGulf Energy Forum focus on Gulf oil reserves and ways to expand energy sources in the European Union.
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