OWN CORRESPONDENT, Vienna | Monday
OPEC ministers have agreed to raise oil supplies by 800 000 barrels a day in a bid to tame runaway crude oil prices and avert a consumer scare over fuel costs – but it could be months before prices ease.
The Organisation of the Petroleum Exporting Countries agreed to lift production by just over 3% to 26.2m barrels a day for its 10 members, excluding sanctions-bound Iraq.
Opec’s increase should help quell an international outcry over petrol prices and ease concerns that high energy bills might trigger inflation and dent world economic growth. The pact is effective from October 1.
Ministers said the extra oil aimed to meet demands among importing nations for the cartel to push crude back down into its preferred range of $22-$28 a barrel.
Oil market analysts said that crude now should retreat from last week’s 10-year highs of $35 a barrel in the United States, but it could be some months before prices ease back down to the $20-$25 a barrel comfort zone sought by big oil buyers.
“Opec cares very much about stability in the oil market with fair and reasonable prices for consumers and is trying very hard to bring this about,” said Opec President Ali Rodriguez of Venezuela.
Worried about the possibility of a price collapse, Opec will review output again at an extraordinary meeting on November 12.
Fuel protests across Europe, where high taxes make petrol and diesel among the world’s dearest, had highlighted impatience among importers for Opec to take strong action.
Since all others in Opec, apart from the United Arab Emirates, already are pumping to capacity, any significant real increase would have to come from the Saudis.
“This deal shows that Opec is serious about trying to get prices down,” said Gary Ross of US consultancy Petroleum Industry Research Associates. “At the end of the day it’s all about what Saudi Arabia will actually produce.”
Saudi Oil Minister Ali al-Naimi said in New York earlier this week that Riyadh was already pumping another 600 000 barrels a day since July.
Opec’s latest deal means it has lifted supply this year by 3.2 million barrels day, a 14% increase, restoring most of the curbs dating back to 1998 when crude slumped briefly below $10 a barrel.