OPEC unlikely to raise production to counter rising prices

A Saudi proposal to hike OPEC’s oil production ceiling to bring it in line with real output appeared to be losing favour today, with Libya’s oil minister saying most members were opposed.

Even before he spoke, oil prices hit near-record levels.

“There’s mostly a consensus not to increase 500,000 barrels a day at this time,” Libyan Oil Minister Fathi bin Shatwan said in Iran ahead of tomorrow’s policymaking session of the Organisation of Petroleum Exporting Countries.

Earlier, the group’s Kuwaiti president and Saudi Arabia, the oil cartel’s main producer, said OPEC would likely raise its production ceiling by 500,000 barrels a day to head off rising prices and calm a jittery international oil market.

Even if accepted, agreement on increasing production above the official ceiling of 27 million barrels a day would have mostly a psychological impact as OPEC is already producing about 700,000 barrels above its quota.

The move would do little to alter market fundamentals, or worries that projected strong demand for this year would outpace the 11 nation organisation’s ability to produce enough crude.