OPEC oil ministers were considering offering 2 million extra barrels a day in an effort to calm a market rattled by refinery shutdowns and concerns over supplies ahead of the winter heating season, the cartel's president said yesterday.
Sheik Ahmed Fahd al-Ahmed al-Sabah, who is also Kuwait's oil minister, said some members of the Organization of Petroleum Exporting Countries (OPEC) were backing a plan to keep the output ceiling unchanged at 28 million barrels a day, but make a one-time offer of an additional 2 million barrels to test demand for crude and cool near record-high prices.
Others supported a move to hike the quota by 500,000 barrels a day, or 2 percent.
"Consultations are going in a positive way," said Sheik Ahmed. He said a decision on OPEC's output quota could come later yesterday.
Libyan Oil Minister Fathi Hamed bin Shatwan said OPEC was likely to test the market first.
"We'll say there is 2 million barrels a day available here," he said. "Who will buy it is welcome; to test the market and to show that there is no need [for a output hike]. We say the market is well supplied and people don't believe us."
Initially, most ministers appeared to support a 500,000-barrel-a-day increase, although they maintained that the market is well supplied with crude and the problem lies with refining products.
Oil Minister Ali Naimi of Saudi Arabia, the OPEC member with the best capacity to increase production, has said he supports a ceiling hike, but that he also did not see demand for more crude. He did not specify the size of the increase. OPEC's current output ceiling is 28 million barrels a day.
"The initial question is where is the 2 million barrels going to come from," said Paul Horsnell, head of energy research at Barclays Capital in London.
"If this comes from Naimi's mouth, it has credit, but when you have smaller countries floating this, I would put a big question mark on it," he said.
Prices soared after Hurricane Katrina slammed into the US Gulf Coast, a major oil production hub. The storm has been blamed for the evacuation of more than 700 offshore platforms and rigs. Several Gulf Coast refineries have shut down or reduced operations.
Light, sweet crude for October gained US$0.62 yesterday to US$63.62 a barrel on the New York Mercantile Exchange by midmorning in Europe, still more than US$7 off its all-time-high intraday price of US$70.85 on Aug. 30. Gasoline rose more then US$0.04 cents to US$1.8255 a gallon (3.8 liters).
On Sunday, Sheik Ahmed said OPEC may even need to act again before the end of the year as US refineries hit by Katrina recover and the northern hemisphere's winter sets in.
"I think in November some refineries will come back in the south of the United States, and if the winter is cold, we have to do our best to increase real production," he said.