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EDITIONS
Thursday, 29 August, 2002, 13:37 GMT 14:37 UK
Opec set to lift oil output
Opec meeting
Saudi Arabia is thought to favour a rise
Speculation is increasing that Opec, the oil producers' cartel, will shortly raise output in an attempt to push down prices.

Crude oil prices have risen in recent weeks, mainly because a stepping up in US rhetoric against Iraq has caused nerves about the impact any war would have on Middle East oil supplies.

In the past two days, both Opec sources in Vienna and senior sources in Gulf Arab countries have suggested the group might lift production by up to 750,000 barrels a day (b/d).

Analysts say an output increase of this magnitude would not substantially alter the balance of world supply and demand but would send a signal that Opec was prepared to act to calm nervous markets.

It would also be a conciliatory move towards the US, the world's biggest oil consumer and a major importer of Middle East oil.

More sympathetic

Any increase in production quotas would be announced at Opec's meeting in Japan on 19 September but the argument in favour of such a move is not yet won.

Saudi Arabia, the world's biggest oil producer and exporter and a key Opec member, is traditionally more sympathetic to US urgings for more, cheaper oil.

Opec
Algeria
Indonesia
Iran
Iraq
Kuwait
Libya
Nigeria
Qatar
Saudi Arabia
UAE
Venezuela

It also has greater spare capacity than other Opec states that could be released to the market when needed.

An Opec official on Thursday said he believed Saudi Arabia would push for an increase in September and a compromise of a modest boost to supplies - 500,000-750,000 b/d - was the likely outcome.

But some other Opec members have spoken out in recent days against the need for changes.

Iran, Kuwait, Venezuela and Indonesia are all in this camp.

Over quota

At present, the 10 Opec members participating in the quota system - Iraq is excluded - are officially limited to producing 21.7 million b/d.

In practice, they are pumping about 2 million b/d more than that, independent industry analysts say.

In London, the benchmark oil price stood at $26.88 a barrel, modestly lower on the day, as traders absorbed the signals from Vienna.

Analysis of the oil market, OPEC, and the alternatives

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27 Aug 02 | Business
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