Fears that militant attacks will destabilize Saudi Arabia drove crude prices to record highs yesterday in their biggest jump in more than a year, shoving Asian stock markets lower.
The dollar gained on upbeat US economic data, as NYMEX crude oil futures hit a record high of US$42.45 a barrel in Asian trading.
"Even if they are not capable of doing serious damage to oil infrastructure, political instability and the threat to the ruling family is of real concern and promises to haunt the oil market for some time to come," said OPEC analyst Geoff Pyne.
PHOTO: AP
Safe-haven gold rose in early Europe, supported by high oil prices, after being pressured in lower in Asia by the dollar's strength. Spot gold was at US$395.30 an ounce versus US$394.30 in late New York.
Japan's Nikkei average fell 0.5 percent to close at 11,242.34, led lower by exporters and banks. Sharp Corp sank 2.8 percent.
Japan, South Korea and Taiwan are almost entirely dependent on imported oil. Stocks in South Korea and Taiwan sank 1.4 percent and 1.9 percent respectively.
Saudi Oil Minister Ali al-Nuaimi said yesterday that Riyadh and OPEC aim to bring down soaring oil prices to between 22 and 28 dollars a barrel.
"Saudi Arabia and OPEC countries are working to stabilize prices within the price band of US$22 to US$28 per barrel for the OPEC basket of crudes," he told a conference here on the eve of the cartel's extraordinary meeting in Beirut.
OPEC producers, under heavy pressure from consumers to raise production, gathered in Beirut for a meeting overshadowed by a weekend terrorist attack in Saudi Arabia.
EU finance ministers late Tuesday expressed concern that skyrocketing oil prices could jeopardize Europe's fledgling economic recovery, calling on OPEC again to act to calm the market.
OPEC president Purnomo Yusgiantoro told reporters in the Lebanese capital that the oil cartel had the ability to increase production by 12 percent.
But traders are worried that any extra oil may come too late to ward off shortages of gasoline in the US during the peak summer period, and are also fearful of disruption to Saudi Arabian supplies.
"A supply increase will not help lower prices," said Iranian Oil Minister Bijan Zanganeh.
"The fear factor, we cannot control it, we wish we could, but we will do something," Qatari Oil Minister Abdullah al-Attiyah said.
OPEC is considering lifting supply quotas by 2 million to 2.5 million barrels daily, a rise of 8 to 11 percent.
Kuwait's oil minister said on Tuesday his country was increasing oil installation security and was coordinating with fellow Gulf producers to protect against attacks.
The United Arab Emirates will increase oil production this month by 400,000 barrels per day [bpd] over its OPEC quota to help ease record prices, Oil Minister Obeid bin Saif al-Nassiri said yesterday.
"The Emirates will add an extra 400,000 bpd to its production quota in June in response to client demand and to help contain prices on the international market and to stabilize the world economy," Nassiri said, quoted by the state news agency WAM.
The UAE, one of only a few OPEC countries with spare production capacity, has a quota of 2.051 million bpd.
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