OPEC mulls possibility of raising output

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.