OPEC Increases Oil Output by 500,000 Barrels a Day
By SIMON ROMERO
VIENNA, June 15 - OPEC said today that it had agreed to lift its oil production quotas by 500,000 barrels a day in a move reflecting the organization's unease with soaring worldwide energy demand.
The increase, which officially puts the output quotas of the Organization of the Petroleum Exporting Countries at 28 million barrels a day, was considered mostly symbolic since its 11 member nations are already producing about that amount of oil each day in a rush to cash in on high prices. Energy markets shrugged off the announcement; in early trading in New York, oil was up 48 cents, or nearly 1 percent, to $55.48 a barrel.
The decision by OPEC comes amid a state of confusion among its members on how to deal with galloping international oil consumption, particularly in China. Representatives from Saudi Arabia, OPEC's largest producer, repeatedly claimed here this week that a lack of refining capacity in industrial countries, instead of a lack of oil supplies, was responsible for the recent surge in prices.
Other factors, however, are clearly pushing oil prices higher. The British oil concern BP, in its annual review of energy trends, said this week that global oil consumption climbed 3.4 percent in 2004, or 2.5 million barrels a day, the fastest rate of growth since 1978. China was responsible for much of this demand with its overall energy consumption growing 15.1 percent last year, according to Peter Davies, chief economist at BP.
Strong demand for oil, meanwhile, is making it costlier and more difficult to increase worldwide supply at a time when oil production is declining in several key regions. For instance, in the United States, the world's largest oil consumer, daily oil output fell by 160,000 barrels a day last year in a continuation of a long downward trend, BP said. The United States accounts for almost a quarter of the 84 million barrels of oil consumed in the world each day.
Saudi Arabia is the only nation with much spare oil production capacity, an anomaly that originated in the 1970's when the American owners of Aramco, the energy concern that is now controlled by the government in Riyadh, invested heavily in drilling. But the excess oil Saudi Arabia can provide to the markets is not finding buyers because fewer refineries have been built to process it in recent years, said Ali al-Naimi, Saudi Arabia's oil minister.
Some of OPEC's own members, meanwhile, are witnessing their own declines in oil production. Output in Venezuela, a founding member of OPEC and recently one of the most vocal members in support of keeping world oil prices high, fell 40,000 barrels a day in May to 2.12 million barrels, according to the International Energy Agency. Venezuela's oil production has been falling as its national oil company, Petróleos de Venezuela, struggles to recover from internal strife.
Oil production is also down in Iraq, falling 80,000 barrels a day in May to 1.75 million barrels a day, according to the I.E.A., largely because of technical problems in its southern oil fields. Iraq, which is thought to possess the second-largest oil reserves after Saudi Arabia, does not have a fixed production quota within OPEC but continues to send a representative to meetings at the organization's headquarters in Vienna.
International oil companies with hopes to enter Iraq have had to put their ambitions on hold because of instability in the country more than two years after the removal of Saddam Hussein. Iraq's oil minister, Ibrahim Bahr Al-Ulum, said investment contracts with foreign oil concerns would not be signed until the end of 2006 at the earliest, according to Reuters. |
