KUWAIT CITY, 28 June 2005 — OPEC’s president said yesterday he was still discussing with the organization’s ministers the possibility of raising output by 500,000 barrels per day (bpd) to stabilize prices if there is a rise in demand. “We are still discussing with our colleagues in OPEC (the possibility) to release the 500,000. I am waiting for their answer at this point, especially since they are studying the demand and supply for June,” Kuwait’s Energy Minister Ahmad Fahd Al-Sabah told reporters. “If we find there is a shortage in the market I think they will approve releasing the 500,000. I think this week we will reach a solution,” he said.
Ahmad said Saturday he had contacted Saudi and Qatari counterparts as part of consultations with cartel members to study ways to calm soaring prices. At a meeting in Vienna this month, OPEC decided to raise its production quota by 500,000 bpd to 28 million bpd on July 1 with the option of a second hike of 500,000 bpd before September, according to the discretion of the president.
However, that decision was seen as a symbolic gesture because the organization is already pumping more oil than its current official ceiling of 27.5 million bpd. “I support anything that stabilizes prices and Kuwait supports... the release of the (new) 500,000 bpd,” Ahmad said.
The daily production of OPEC members excluding Iraq is estimated at about 28.2 million bpd and if the cartel approves the new increase, about 300,000 bpd of actual crude will be added to the market.
Ahmad said the extra oil would come mainly from Saudi Arabia, and possibly from the United Arab Emirates, while Kuwait has an additional 50,000 to 100,000 barrels “for a short term.”
World oil prices surged to fresh record levels yesterday, approaching $61 per barrel as supply concerns were exacerbated by a weekend election win for the ultra-conservatives in Iran, analysts said.
New York’s main contract, light sweet crude for delivery in August, shot up 58 cents to $60.42 a barrel in electronic deals yesterday. It had earlier reached an historic high point of $60.64 — the highest level since the contract was first traded in 1983.
In London, the price of Brent North Sea crude oil for delivery in August jumped 64 cents to $59.00 after reaching a new historic high point of $59.21. Prices are breaking records on concerns that refineries will struggle to turn enough crude oil into heating fuel to meet fourth-quarter demand.
The OPEC chief said the organization’s focus now is to study the market based on figures for the month of May to see if there is a shortage of supplies. “A number of my colleagues are studying the market on the basis of May figures to make sure there is no shortage,” he said. If this is true “then the issue of (high) prices is not related to supplies, but to products and refineries, which we have always said are the cause of high prices,” Ahmad said.