OPEC to raise output ceiling immediately, may raise again by next meeting UPDATE
Wednesday, March 16, 2005 2:02:58 PM
forexstreet.com
(Updating to show OPEC has released statement formally announcing increase) ISFAHAN, Iran (AFX) - OPEC countries will increase their output cap from 27 mln to 27.5 mln barrels per day (bpd) and will consider another rise of 500,000 bpd by their next meeting if prices stay high, the cartel said in a statement
"The conference decided to increase the production ceiling to 27.5 million barrels per day effective immediately," said the statement
"The conference further authorised the president, after consultations with fellow heads of delegations, to allow an additional 500,000 barrel per day increase in the ceiling by its next meeting (June 7) should prices remain at current levels or continue to further rise," it added
Kuwaiti Energy Minister and OPEC President Sheikh Ahmad Fahd al-Sabah said: "OPEC is committed to making sure the market is well supplied at reasonable prices." He added: "OPEC is doing everything it can to restore stability to the market." Under pressure from key producer Saudi Arabia, near record prices and predictions of increased crude demand in the second half of the year, ministers decided to lift their production ceiling immediately
A decision on the second increase will be at the discretion of Sheikh Ahmad, as president of the grouping, and "in consultation with all member countries", Iranian Oil Minister Bijan Namdar Zanghaneh said
Kuwait's Sheikh Ahmad said a further hike would "depend on the prices", while Libyan Energy Secretary Fathi Hamed ben Shatwan said OPEC will "hold consultations in April and will apply it in May if it's needed." Iran's Zanghaneh said: "We hope the market gets a positive signal from this meeting, because OPEC did its most to have a stable market with minimal fluctuation
"We did what we could but there are some factors, among them geopolitical, which are out of our control," he added, saying the Islamic republic -- OPEC's number-two exporter -- would be "satisfied" with a price of 40 usd a barrel
Zanghaneh said OPEC will next meet on June 7
Barclays Capital analyst Kevin Norrish said that OPEC's decision to raise quotas and production "will help ensure oil markets have sufficient crude oil to meet rapidly growing demand
"However it remains to be seen whether the planned second quarter increase in output will be enough to push oil prices back down very much," he added
Saudi Arabia, the world's largest producer and cartel kingpin, had warned that it could go it alone to boost output if it failed to win over sceptical OPEC members of the need to bring prices back down from near-record highs and meet predictions of increased demand for crude in the later half of the year
"We are trying to make sure the market is stable. We're trying to provide stability to the market," Saudi Oil Minister Ali al-Nuaimi said, having signalled the kingdom would prefer to see prices to fall from the 55 usd mark to between 40 and 50 usd a barrel
Libya's Shatwan said OPEC is only "raising the ceiling because it's already produced" -- a reference to estimates that OPEC's actual output is around 29 mln bpd
Ministers also decided to modify the composition of OPEC's reference basket, Shatwan said
"Up until now we have had small number of crude oils, but each country has its own crude, one type for each country, 11 in total," he said, adding the new basket would be put in place in June |
