Opec chief says oil output could be boosted by 15%
Opec, supplier of a third of the world’s oil, has enough spare capacity to boost output by up to 15% if it sees the need, the cartel’s president said today.
The Organisation of Petroleum Exporting Countries is already producing 25.5 million barrels a day – two million barrels above its target – and it could add as much as 3.8 million barrels to global supplies “if necessary,” Purnomo Yusgiantoro said in London
Purnomo, an Indonesian, was hoping to reassure a market agitated by unexpectedly strong demand for crude and fears about instability in the Middle East.
US oil prices have soared above 40 dollars a barrel, and Opec is under mounting international pressure to increase its production to try to ease prices lower.
Several, if not all, of Opec’s members are expected to gather for emergency talks on Saturday during an energy forum in Amsterdam.
Purnomo said he hoped they would discuss a Saudi proposal for Opec to raise its output target by 1.5 million barrels. Saudi Arabia is the only group member with significant additional capacity.
The EU’s energy commissioner, Loyola de Palacio, said in Brussels that Opec risks losing credibility if it refuses to boost output during these talks.
“A decision must be taken to raise oil production,” said de Palacio, who also will attend the forum in the Dutch capital.
However, Purnomo said that any agreement to change the Opec target would require the approval of all the group’s members, and an official at Opec’s headquarters in Vienna said that some members might not attend the Amsterdam talks.
Regardless of what happens this weekend, a formal decision to raise the production target would have to wait until all of Opec’s 11 members meet formally on June 3 in Beirut, officials have said.
Opec members blame speculators and geopolitical jitters for much of the strength in prices, and many insist there is no physical shortage of crude.
Analysts say that an increase in Opec’s production target would only reduce prices if it meant the group added real barrels to the market. They say a modest increase in the target might just change output on paper, by legitimising some of the oil Opec is producing above its current target.
