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Last Updated: Tuesday, 27 April, 2004, 10:15 GMT 11:15 UK
Opec members mull oil price rise
Man filling car at petrol station
There are concerns that high fuel costs could dampen economic recovery
Oil producers' cartel Opec is mulling whether to increase its target price for a barrel of oil, the group's President Purnomo Yusgiantoro has said.

It currently tries to keep the oil price between $22 and $28 per barrel.

But Opec - the Organisation of Petroleum Exporting Countries - has complained the value of oil sales has been hit by the slump in the dollar.

Any rise is likely to raise concerns about the effect of higher fuel and raw material costs on global growth.

Bad idea

Earlier this year, the US criticised plans by Opec to cut output as a tax on consumers and warned that it may derail a fragile economic recovery.

Opec accounts for about 40% of world oil production.

Since then gasoline prices have climbed to record levels and the cost of crude is stubbornly hovering close to 13-year highs.

Mr Purnomo, however, played down the risks saying that the price range "was decided in 2000 and now it is 2004".

Already the cost of Opec crude is well above its price range, trading at close to $33 a barrel.

And one of the main contributing factors may in fact be surging growth in the US and China that is sucking up oil supplies.

Split

But the increase is far from certain, with Opec members split over what should be done.

Venezuela, along with Nigeria, has been among the countries pushing for an increase.

Oil minister Rafael Ramirez said on Monday that the South American country would push for a $2 price increase to the target range at the Opec meeting in September

However, the group's biggest producer Saudi Arabia reiterated its backing for the current price levels, a stance that was echoed by Iran.

Saudi Arabia's oil minister Ali al-Naimi said that his country is "committed" to the status quo of $22 to $28 a barrel.

The minister added that neither Opec nor Saudi Arabia was to blame for the recent spike in prices.

He pointed the finger instead at shortages of gasoline in the US and a general increase in demand for commodities.




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