Opec promises to calm the market

World oil prices simmered close to record high levels on Wednesday as Opec producers, under heavy pressure from consumers to raise production, gathered in Beirut for a meeting overshadowed by a weekend terrorist attack in Saudi Arabia.

European Union finance ministers late on Tuesday expressed concern that skyrocketing oil prices could jeopardise Europe’s fledgling economic recovery, calling on Opec again to act to calm the market.

Opec president Purnomo Yusgiantoro told reporters in the Lebanese capital that the oil cartel had the ability to increase production by 12%.

But traders are worried that any extra oil may come too late to ward off shortages of gasoline in the United States during the peak summer period, and are also fearful of disruption to Saudi Arabian supplies.

Crude oil prices surged $2,45 to a record closing price of $42,33 a barrel in New York on Tuesday as a weekend attack in oil kingpin Saudi Arabia stoked fears of turmoil in the world’s largest exporter.

New York’s light sweet crude contract for delivery in July slipped 23 cents a barrel to $42,10 in out-of-hours electronic trading.

In London, the price of benchmark Brent North Sea crude oil for July delivery also eased back 23 cents to $38,85 in electronic dealing, about one hour ahead of the open at 9am GMT.

Prices surged after 22 people, including 19 foreigners, were killed in a weekend attack and hostage taking at oil company offices and a housing complex in the eastern Saudi city of Al-Khobar.

“The market is in a panicking psychological mood,” said US-based analyst Mike Fitzpatrick at Fimat USA.

The attack in Saudi Arabia was damaging, he said even if no oil infrastructure were damaged, because “it sends a psychological message, especially for workers”.

The price surge came despite expectations that Opec producers meeting in Beirut this week will agree to raise the cartel’s output quota of 23,5-million barrels per day (bpd) in response to record high prices.

Opec has reached “near consensus” to raise its crude oil production, Qatari Energy Minister Abdullah Bin Hamad al-Attiya said on Tuesday in the Lebanese capital ahead of the cartel’s formal meeting on Thursday.

He said the Organisation of Petroleum Exporting Countries would do “everything it can” to calm the market. - Sapa-AFP

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