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Last Updated: Sunday, 13 March, 2005, 10:23 GMT
Oil nations 'can exceed' quotas
An oil refinery in Basra, Iraq
Oil prices look set to rise further this year
Oil producers' cartel Opec may agree at its meeting next week to allow members informally to pump above official output quotas to limit rising prices.

Opec will stabilise prices by keeping the ceiling as it is now or "allowing overproduction to continue like it did in 2004," its president said.

Sheikh Ahmad al-Fahd al-Sabah, also Kuwait's oil minister, said some members were now pumping above quotas.

Oil prices rose again last week and are nudging $55 a barrel.

Opec, however, is expected to maintain its formal production limit of 27 million barrels per day (bpd) at its Wednesday meeting in Isfahan, Iran.

Demand for crude

But Sheikh Ahmad admitted: "I think that now everybody is overproducing. Current prices make it lucrative for everybody to hike production without the need for an (official) decision."

The International Energy Agency (IEA) has said Opec production rose in February by 390,000 bpd to 29 million bpd.

This was mainly due to increases in output from Kuwait, Nigeria, Saudi Arabia and Iraq.

"Until now I don't think there is a shortage in the market, and I think Opec, due to current prices, will continue with the same ceiling (at Isfahan)," Sheikh Ahmad said.

On Friday the IEA said demand for crude oil will grow even faster than expected as China's appetite for energy stays undiminished.

The organisation, set up by governments to monitor oil stocks in the 1970s, said demand would rise 1.8 million barrels a day to 84.3 million.

Key causes include freezing weather and strong growth in the US and China.

Some of the factors which have pushed oil prices up

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