OPEC President: Likely to Raise Oil Output

OPEC will likely raise its output ceiling by 500,000 barrels a day if prices stay at present levels, Kuwaiti Oil Minister and OPEC president Sheikh Ahmad al-Fahd al-Sabah said Monday.

Meanwhile, leading OPEC producer Saudi Arabia called for a modest increase in cartel supplies that could help ease oil prices from near-record highs.

Saudi Oil Minister Ali al-Naimi, speaking ahead of a Wednesday meeting of the Organization of the Petroleum Exporting Countries (search), said the group should lift supplies by 500,000 bpd, two percent, to 27.5 million bpd.

A 500,000 bpd increase in OPEC output quotas would not add much to supplies on the 83-million-bpd world market.

With OPEC already overshooting quotas by about 700,000 barrels a day, any such move would mostly have psychological effect by signaling that the organization is formally ready to pump more in an effort to regulate prices.

Prices have shot up by nearly 20 percent in the past five weeks to around $54 a barrel in New York — a little more than a dollar shy of all-time records — putting pressure on the 11-nation organization to cool the markets.

Al-Sabah already 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."

Ministers had signaled the group was likely to keep its poutput quotas steady and merely agree to leak out more oil when it meets Wednesday on production policy for the spring. But Al-Naimi changed the terms of the debate Monday by calling for a formal increase in quotas, and Al Sabah on Monday signaled consensus was building around that idea.

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.

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. Consumer nations are worried that inflated energy costs could slow the pace of world economic growth, but so far the impact of high prices has not been severe.

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.

Iraq, not subject to a quota, is supplying about another 2 million bpd, putting total OPEC output close to September's 25-year-high production peak of over 30 million bpd.

Reuters and the Associated Press contributed to this report.