Opec to plan strategy amid high prices

Opec is hastily preparing a conference to dicuss oil production quotas and sky-high energy prices.

    Only Saudi Arabia and the UAE can raise production

    The 11-nation group's members will meet at a conference on 22 May, and many observers hope for a decision then.

    But while Opec members warned that an increase may not bring down prices, the EU said there was now an "urgent need" for more supply.

    US light crude ended the day up 96 cents to $41.50, just 5 cents below Monday's historic 23-year high.

    EU concerns

    The call for Opec to increase production was led by EU commissioner Loyola de Palacio.

    She said the global economy would bear "a very heavy cost" unless prices moderated.

    "The problem today is not a crude oil problem. It is a gasoline market problem"

    Purnomo Yusgiantoro,
    Opec president

    A willingness to raise production - a suggestion made by Saudi Arabia and backed by the United Arab Emirates - was, she warned, "a question of credibility for Opec".

    "If it does not come about, we will clearly see that Opec is not interested in oil price stability," de Palacio said.

    Supply

    But Opec members are already pumping 85-95% of capacity, according to the cartel's Indonesian president Purnomo Yusgiantoro.

    "The problem today is not a crude oil problem," he said. "It is a gasoline market problem."

    Demand is being boosted by a number of factors, including the uncertainty in Iraq, vast demand from the fast-growing Chinese economy and low stocks in countries across the developed world who are choosing to stockpile because of tensions in the Middle East.

    Opec's most recent figures show that its 10 members who are meant to cap production are already quota-busting to the tune of 2.1 million barrels a day above the 23.5 million target.
     
    With that kind of over-production, experts say, only Saudi Arabia and the UAE have much headroom to pump more.

    For other members, a quota rise would only legitimise their existing output.

    SOURCE: Agencies


    YOU MIGHT ALSO LIKE

    Learn what India's parties' symbols mean by drawing them

    Learn what India's parties' symbols mean by drawing them

    More than 2,300 political parties have registered for the largest electoral exercise in the world.

    Visualising every Saudi coalition air raid on Yemen

    Visualising every Saudi coalition air raid on Yemen

    Since March 2015, Saudi Arabia and a coalition of Arab states have launched more than 19,278 air raids across Yemen.

    Why did Bush go to war in Iraq?

    Why did Bush go to war in Iraq?

    No, it wasn't because of WMDs, democracy or Iraqi oil. The real reason is much more sinister than that.