VIENNA - Opec oil producers are preparing to raise supply limits to counter global energy security concerns after Hurricane Katrina pushed crude prices over US$70 a barrel.
Under pressure from importing nations, the Organisation of the Petroleum Exporting Countries begins a 2-day meeting on Monday to consider raising output just
as fuel demand starts to buckle under the impact of high prices.
Crude has fallen from a record US$70.85 a barrel in the three weeks since Katrina tore into US Gulf refineries, losing US$1.75 on Friday to close at US$63.
"For Opec the price is still very high," Opec President Sheikh Ahmad al-Sabah told reporters in Vienna.
Sheikh Ahmad meets European Union Energy Commissioner Andris Piebalgs in Vienna later on Monday and is likely to stress that Opec is doing its best to prevent inflated energy costs hurting global economic growth.
"The political pressure to increase output will be well balanced by market reasons not to do so," said US consultancy PFC Energy.
Ministers say they will consider adding 500,000 to 1 million barrels a day, 2-3.5 per cent, on existing limits of 28 million bpd. Iraq, with no quota, pumps an additional 2 million bpd.
But Opec is warning that any cartel agreement may not actually deliver more crude because global refining is already stretched to full capacity.
With nearly 900,000 bpd of US refining still shut after Katrina the only producer able to pump more, Saudi Arabia, cannot find buyers.
"The talk of an increase is mainly to give comfort to the market," said Nigerian Oil Minister Edmund Daukoru. "It is refining capacity we have to worry about."
- REUTERS
