ISFAHAN, Iran, 16 March 2005 — OPEC’s key advisory committee yesterday recommended that the organization raise its production ceiling by 500,000 barrels per day if prices stay high through April, a sources close to the talks said.

“The recommendation... is that OPEC will continue to monitor the markets, to continue to monitor the price developments through April. If prices remains at current levels we may increase the ceiling by 500,000 (bpd) with effect May 1,” the official said.

Nigeria’s presidential adviser for oil Edmund Daukoru had said OPEC’s Ministerial Monitoring Subcommittee had recommended an increase, but would leave it up to the organization’s members, due to meet today, when to decide on when it should take effect.

Saudi Arabia, OPEC’s top producer, has been pushing the organization to raise its ceiling from 27 million to 27.5 million bpd, citing projections of increased crude demand in the second half of 2005.

The committee comprises representatives from Nigeria, Iran and Kuwait. Its recommendations are frequently followed by OPEC member states.

However, world oil prices fell yesterday.New York’s main contract, light sweet crude for delivery in April, dropped 32 cents to $54.63 a barrel in early afternoon deals, reversing initial gains. In London, the price of Brent North Sea crude oil for delivery in April fell six cents to $53.60 a barrel, also after early winnings.

“The price risks are more to the upside than the downside,” said analyst Yasser Elguindi of Medley Global Advisors.” “There is lot more demand for the second half of the year than OPEC realized at the start of the year. They need to catch up to that reality.”

With group output already close to a 25-year high, traders are concerned about OPEC’s ability to meet rapid demand growth, led by China, in the second half of the year. “OPEC has done all it can do. This is out of the control of OPEC,” said Qatar Oil Minister Abdullah Al-Attiyah. “There is not much we can do, we can make a good will gesture,” said Algerian Oil Minister Chakib Khelil.

OPEC experts now are projecting growth of 1.9 million barrels a day on the 84-million-bpd world market, following last year’s burst of 2.6 million bpd. Worried that energy costs could derail economic growth, US Energy Secretary Sam Bodman contacted a number of OPEC nations on policy ahead of the meeting, ministers said.

Some in OPEC see no economic damage from even higher prices, pointing out that the peaks of the 1970s, allowing for inflation, were equivalent to $80 a barrel in today’s money. “Even at $60 we see no economic impact,” said Libyan Energy Minister Fathi Omar ibn Shatwan.