OPEC mulls possibility of raising output

Fitri Wulandari, Jakarta

The Organization of Petroleum Exporting Countries (OPEC) is reviewing raising its output quota to cap surging oil prices that have reached a 13-year high.

"I am in communication with the OPEC Secretariat and we are still studying this possibility. We have to determine the cause of the high prices. We want to assure the market there is enough supply," the cartel president Purnomo Yusgiantoro said on Wednesday.

He declined to say if OPEC would raise its production quota at a meeting in Beirut on June 3.

Purnomo said OPEC had recently pumped an extra 1.5 million barrels per day (bpd) of crude to push the price down. Earlier it had decided to cut production from 24.5 million bpd to 23.5 million bpd from April 1.

World oil prices reached their highest level in 13 years on Tuesday, following violence in the Middle East and low fuel stocks in the U.S.

Reuters reported London's Brent crude soared 4.4 percent or US$1.52 to $36 a barrel on Tuesday after five Western workers were killed at a Saudi chemicals plant in Yanbu. The level was the highest since the U.S. invaded Kuwait in the Gulf War.

London's Brent crude slipped 13 U.S. cents to $35.80 on Wednesday.

U.S. light crude, meanwhile, eased just 11 cents to $38.88 a barrel after closing at $38.98 the previous day.

Crude prices have stubbornly stayed above OPEC's price band target of $22-$28 per barrel since Dec. 5. The cartel has said higher crude prices were caused by non-fundamental factors such as violence and speculative activity.

The attack in Yanbu has raised fears about the security of oil infrastructure in Saudi Arabia, the world's top crude exporter. It has also caused general concern about the security of supply from Middle East states, whose oil production accounts for a third of global oil output.

Fears of low fuel stocks in the U.S. also sent crude prices higher. There is concern new U.S. environmental rules may force local refiners to stop producing enough gasoline to meet the holiday demand.

The International Energy Agency (IEA) has predicted high oil prices are likely for some time. Continued high prices would further strain the economies of oil importing countries.