VIENNA: OPEC ministers head into crunch talks about the cartel's output on Tuesday, with signs that the group might bend to the will of Saudi Arabia and increase production.
Oil prices in New York closed within striking distance of their record high of 78.77 dollars on Monday, with analysts warning that inaction by the Organisation of Petroleum Exporting Countries could send prices above 80 dollars.
A majority of ministers have rejected pressure from consuming nations for higher supplies, but the Saudi kingdom, the biggest producer in the 12-member cartel, may still prevail with a campaign for an increase of 500,000 barrels per day, analysts believe.
In an indication that some members are now willing to concede to an increase, Kuwaiti Acting Oil Minister Mohammad al-Olaim told reporters on Monday: "We have to take our responsibility as producers."
He added: "We have to take care of them (consumers), as they take care of us."
Kuwait had previously dismissed demands for a production increase, along with most of the other OPEC members, arguing that the market was adequately supplied.
High oil prices have become an added burden for the world economy in addition to financial market turbulence and a crisis in the US "subprime" housing market.
Saudi Arabia is believed to be worried that high oil prices could drag on economic growth, which would reduce demand for oil in the long term. Oil prices spiked higher on Monday in New York and London, with New York prices at 77.49 dollars and London above 75 dollars.
Algerian Energy Minister Chakib Khelil, arriving late on Monday, also opened the door to an output hike, acknowledging the danger of supply shortages heading into the peak demand period for oil in the northern hemisphere winter. "Right now, as of today, there is no problem between supply and demand," he said, before adding: "Maybe we'll have a problem in the next few months." Indonesia and Iraq are also in favour of taking action to lower prices, but there is stiff opposition from OPEC's leading hawks, Iran and Venezuela. Khelil said the group had still not found a consensus.
The International Energy Agency, the energy watchdog for the world's rich, oil-consuming countries, warned again on Monday about a shortage of supply in coming months.
"The current market is very tight," new IEA chief Nobua Tanaka said in Berlin.
Analysts at Barclays Capital warned last week of new record highs of more than 80 dollars a barrel unless OPEC ministers made a gesture to show they were ready to cool the market.
"OPEC recognises prices are too high as we're going into the winter months (in the northern hemisphere)," OPEC watcher John Hall of London-based oil consultancy John Hall Associates told AFP here.
"The Saudis will closely listen to what the US and Europe want," he added. After holding informal meetings throughout the day on Monday, the 12-member group will make a formal decision on Tuesday at the cartel's headquarters here.
Analyst Hall said that the final outcome would be determined by Saudi Arabia, the only OPEC member with the ability to increase production significantly.
"Saudi Arabia is the key to this," he said.
Vera de Ladoucette, analyst at influential consultancy Cambridge Energy Research Associates, added: "There is speculation about an increase of 500,000 barrels."
OPEC produces about a third of world crude supplies.
It has an output target of 25.8 million barrels, but the 10 members constrained by output limits are estimated to be producing almost a million more barrels a day than this.
Source : economictimes.indiatimes.com
Oil prices in New York closed within striking distance of their record high of 78.77 dollars on Monday, with analysts warning that inaction by the Organisation of Petroleum Exporting Countries could send prices above 80 dollars.
A majority of ministers have rejected pressure from consuming nations for higher supplies, but the Saudi kingdom, the biggest producer in the 12-member cartel, may still prevail with a campaign for an increase of 500,000 barrels per day, analysts believe.
In an indication that some members are now willing to concede to an increase, Kuwaiti Acting Oil Minister Mohammad al-Olaim told reporters on Monday: "We have to take our responsibility as producers."
He added: "We have to take care of them (consumers), as they take care of us."
Kuwait had previously dismissed demands for a production increase, along with most of the other OPEC members, arguing that the market was adequately supplied.
High oil prices have become an added burden for the world economy in addition to financial market turbulence and a crisis in the US "subprime" housing market.
Saudi Arabia is believed to be worried that high oil prices could drag on economic growth, which would reduce demand for oil in the long term. Oil prices spiked higher on Monday in New York and London, with New York prices at 77.49 dollars and London above 75 dollars.
Algerian Energy Minister Chakib Khelil, arriving late on Monday, also opened the door to an output hike, acknowledging the danger of supply shortages heading into the peak demand period for oil in the northern hemisphere winter. "Right now, as of today, there is no problem between supply and demand," he said, before adding: "Maybe we'll have a problem in the next few months." Indonesia and Iraq are also in favour of taking action to lower prices, but there is stiff opposition from OPEC's leading hawks, Iran and Venezuela. Khelil said the group had still not found a consensus.
The International Energy Agency, the energy watchdog for the world's rich, oil-consuming countries, warned again on Monday about a shortage of supply in coming months.
"The current market is very tight," new IEA chief Nobua Tanaka said in Berlin.
Analysts at Barclays Capital warned last week of new record highs of more than 80 dollars a barrel unless OPEC ministers made a gesture to show they were ready to cool the market.
"OPEC recognises prices are too high as we're going into the winter months (in the northern hemisphere)," OPEC watcher John Hall of London-based oil consultancy John Hall Associates told AFP here.
"The Saudis will closely listen to what the US and Europe want," he added. After holding informal meetings throughout the day on Monday, the 12-member group will make a formal decision on Tuesday at the cartel's headquarters here.
Analyst Hall said that the final outcome would be determined by Saudi Arabia, the only OPEC member with the ability to increase production significantly.
"Saudi Arabia is the key to this," he said.
Vera de Ladoucette, analyst at influential consultancy Cambridge Energy Research Associates, added: "There is speculation about an increase of 500,000 barrels."
OPEC produces about a third of world crude supplies.
It has an output target of 25.8 million barrels, but the 10 members constrained by output limits are estimated to be producing almost a million more barrels a day than this.
Source : economictimes.indiatimes.com
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