Posted on 10/10/2004 12:42:39 PM PDT by wagglebee
ABU DHABI (Reuters) - Major Gulf producer Kuwait will back a hike of 1 million barrels per day in OPEC's output ceiling if oil prices stay at record levels, a move that would bring formal production limits in line with actual supplies.
OPEC ministers also pledged on Sunday to do what they can to deflate oil prices at record high levels beyond $53. Top crude exporter Saudi Arabia said it could immediately tap 1.5 million barrels per day (bpd) of its spare capacity if needed.
"If prices continue as they are now, we will ask for an increase in the ceiling of production. Kuwait would support this," Kuwaiti Oil Minister Sheikh Ahmad al-Fahd al-Sabah told reporters at an oil exhibition in the United Arab Emirates (UAE).
"We could increase by another 1 million to make official the 28 million. That would be another signal to the market that OPEC continues to support market stability," he said.
The 10 OPEC members bound by quotas, excluding Iraq, are now pumping around 28 million bpd, well in excess of an official ceiling of 26 million, which rises to 27 million from November.
The cartel is due to meet in Cairo on Dec. 10 to chart production policy for early next year.
Sheikh Ahmad said OPEC production is now about 30 million bpd with most members stretched to capacity. But he said Kuwait and Saudi Arabia are in a position to increase actual supplies to the market, should the need arise.
"If the demand is there, sure we will add new production to the market," Sheikh Ahmad said, adding that Saudi Arabia could tap 1 million bpd and Kuwait could pump an extra 200,000 bpd from January if needed.
Saudi Oil Minister Ali al-Naimi said the kingdom would hold 1.5-2.0 million bpd of production capacity in reserve but urged global consumers to upgrade refining capacity to handle the additional sour crude oil being pumped by the kingdom.
SAUDI TO GUARANTEE SUPPLIES
Naimi said record high oil prices were "not justified" and could drop after the U.S. November presidential polls.
"This is a political year and this may have some influence," he added.
With OPEC stretching production beyond 30 million bpd, only Saudi Arabia has significant spare production.
"We are pumping around 9.5 million bpd now, and if our customers want more crude, it's available," Naimi said. "There is no shortage of oil, and there will be no shortage of oil, and we are willing to meet demand as it rises."
Kuwait and the UAE said they, too, were working to boost capacity.
Sheikh Ahmad said his country's capacity would hit 2.7 million bpd by the third week of October, but Kuwait will continue to pump 2.5 million bpd in November because there is no demand now for additional heavy Kuwaiti crude.
UAE Oil Minister Obaid bin Saif al-Nasseri said Abu Dhabi was pumping close to its sustainable capacity of 2.5 million bpd. The UAE has 300,000 bpd of spare capacity, but the oil is being kept in the ground due to gas flaring issues, he said.
The oil ministers blamed high prices not on a shortage of oil but on psychological factors and speculation.
Supply worries have been stoked by another strike, set to begin on Monday, in sweet-crude OPEC producer Nigeria and by concerns over fuel stocks as winter approaches the northern hemisphere.
Asked about the impact from possible supply disruptions in Nigeria, Naimi said: "We still have ample capacity within OPEC."
But he admitted there was a shortage of sweet crude supplies.
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