JAKARTA, 14 May 2004 — OPEC President Purnomo Yusgiantoro said yesterday he is confidant members will agree to increase the oil production ceiling when they meet in Amsterdam next week due to soaring crude oil prices.

Yusgiantoro said members of the Organization of Petroleum Exporting Countries would discuss Saudi Arabia’s proposal to raise output by 1.5 million barrels per day. “All OPEC members are concerned about this and my feeling is that they should agree (to a higher oil output) as we need to stabilize the price,” he told a press conference. Yusgiantoro, who is Indonesia’s energy minister, described the Saudi proposal as “quite positive”. The informal OPEC meeting is scheduled for next week on the sidelines of the 9th International Energy Forum in Amsterdam. OPEC sources said the meeting in Amsterdam would be on May 21. It comes ahead of OPEC’s extraordinary conference in Beirut on June 3.

Meanwhile, oil prices held firm near record highs yesterday as concerns that OPEC may not be able to meet the surge in demand fed by global economic expansion fueled speculation that $40-plus oil could be here to stay for some time to come.

Benchmark US light crude futures hit a peak of $41 a barrel from Wednesday’s $40.77, the New York Mercantile Exchange’s highest closing price in the 21 years since launching its crude contract. Light profit-taking saw prices ease by 1700 GMT to $40.57, down 20 cents on the day. London Brent was off three cents at $37.92 a barrel.

The intra-day record for the US contract stands at $41.15 a barrel, struck in 1990 when Iraq’s invasion of Kuwait sparked the Gulf War. The break above $40 for US crude is now in its third day and if dealers were to get comfortable with the price heights over the next week or so there could be an extended run of high-priced oil, said Paul Horsnell of Barclays Capital.

“This is not a spike in the oil price due to a single factor,” said Horsnell. “Indeed, given the erosion in spare oil production capacity, the loss of flexibility in first US and now increasingly global refining and the massive destabilization that has been created in the Middle East, $40 no longer looks at all outrageous.”

World oil demand is proving far stronger than expected, thanks to booming economic growth, the International Energy Agency said on Wednesday. Incremental fuel consumption this year looked set to outpace growth in every year since 1988, it said.

So far, the oil spike does not appear to have stunted growth. The chairman of the White House Council of Economic Advisors, Gregory Mankiw, told Reuters the US economy remained on track for a robust recovery and current oil prices did not pose a significant risk. Some oil analysts think prices are above levels justified by supply-demand fundamentals and are overdue a downward correction.