ABU DHABI, United Arab Emirates – Two of OPEC's leading Gulf producers say the cartel may agree to keep pumping above formal oil output quotas to cool down overheated markets.
The United Arab Emirates (search) Sunday joined Kuwait in suggesting the producer group might take such a decision as U.S. oil prices again threaten to breach $55 a barrel.
"The decision may be to maintain current production levels with the aim of calming the market," UAE Oil Minister Mohamed al-Hamli said in a statement issued ahead of a March 16 OPEC meeting in Isfahan, Iran.
Hamli did not specify how much the Organization of Petroleum Exporting Countries (search) is now producing, but a Reuters survey showed 10 members excluding Iraq pumping 600,000 bpd above an official 27 million barrels per day (bpd) ceiling in February.
Libyan Energy Minister Fathi Omar Bin Shatwan, who arrived in Qatar (search) Monday on a brief visit, was quoted by Qatar's state news agency QNA as saying he believed OPEC would "maintain its current production levels to maintain oil market stability."
Kuwait's Oil Minister Sheikh Ahmad al-Fahd al-Sabah, also OPEC president, acknowledged Saturday that sky-high oil prices have tempted some members to exceed their quotas.
"I think that now everybody is overproducing," he said. "Current prices make it lucrative for everybody to hike production without the need for an [official] decision."
Neither minister saw signs of tightening oil supplies and Hamli suggested stockpiles could even build by 2 million bpd during the second quarter. Oil inventories typically rise then as demand declines following the northern hemisphere winter.
"That shows clearly the abundance of supplies and lack of shortage," Hamli said.
OPEC members Iran, Qatar, Venezuela and Algeria have come out in favor of keeping output steady, with Algeria's minister saying last week that OPEC had no spare capacity to lift quotas.
The two Gulf Arab ministers disagreed with the Algerian assessment, with Kuwait saying the cartel had 2 million bpd to spare.
While most OPEC members are pumping at full tilt, swelling total cartel output including Iraq to about 29.5 million bpd, Gulf producers the UAE, Kuwait and Saudi Arabia still have a sizeable production cushion.
They will shoulder the burden of any further supply increases, whether or not officially sanctioned.
"I think if the prices will continue like this, OPEC's ... behavior will be like 2004 and we will make sure we will do something to stabilize the prices," the Kuwaiti oil minister said.
OPEC raised its official output ceiling by 3.5 million bpd during the second half of last year, but the core Gulf producers — especially Saudi Arabia — took responsibility for the increase.
Booming demand growth in China and the United States has piled pressure on OPEC to expand output capacity.
And the UAE oil minister said the cartel is rising to the challenge.
"Many OPEC members, including the UAE, are currently investing to increase production capacity to meet any increase in future oil demand or any supply shortage," Hamli said.
The UAE's capacity is expected to increase by 200,000 bpd to 2.7 million bpd during the second half of 2005.
Top world exporter Saudi Arabia has plans in place to hoist capacity by 2.3 million bpd by 2009. The kingdom's current production capacity is 11 million.