Purnomo calms fears over oil output disruption

The Jakarta Post, Jakarta

The Organization of Petroleum Exporting Countries (OPEC) doubts that the attack on the Saudi oil city of Khobar will disrupt Saudi Arabia's plan to increase output.

"I think Saudi Arabia will still be able to raise output because it has an unused portion of capacity, since current production is only around 85 percent of its capacity," OPEC president Purnomo Yusgiantoro said on Monday.

Purnomo, who is also Indonesia's minister of energy and mineral resources, said the cartel was concerned about the attack on Saudi Arabia because the country had been expected to increase output to help stabilize soaring oil prices.

Suspected Al-Qaeda militants attacked the oil city of Khobar on Sunday and killed 22 civilians, including Westerners.

The attackers also held hostages expatriates. Some of them died but others were freed on Sunday by Saudi forces.

The attack came less than a week before a major OPEC meeting in Beirut on June 3 to discuss the possibility of increasing output to cool surging oil prices.

Saudi Arabia, the world's largest oil exporter, is the only OPEC member with the capability to increase output.

OPEC normally produces 23.5 million barrels a day (bpd), but has already pumped up production to around 25 to 26 bpd.

Purnomo said earlier the cartel could increase the output quota by two million to 2.3 million bpd. Saudi Arabia has proposed a higher increase of 2.3 million to 2.5 million bpd.

Oil prices have risen to a 21-year high of around $41 a barrel on concerns of tight global supply due to low gasoline stocks in the U.S. ahead of the summer holidays and attacks on oil infrastructure in the Middle East.

However, oil prices retreated to below $40 a barrel last week in respond to the proposed increase in OPEC oil output.

Purnomo said the meeting in Beirut would also discuss the possibility of changing the current target price of $22 to $28 a barrel.

"OPEC's decision must be unanimous, because we do not make decisions based on the opinion of one member country," Purnomo said.