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Last Updated: Sunday, 22 May, 2005, 14:47 GMT 15:47 UK
Opec remarks may pump oil price
Worker at oil plant in Kuwait
Closing the tap on oil supplies may hit global economic growth
Higher oil prices may be looming on the horizon once again after comments from Opec oil ministers over the weekend.

Venezuelan Oil Minister Rafael Ramirez said the oil cartel should consider cutting output to guard against a "collapse" in the cost of crude.

His Iranian counterpart Bijan Zanganeh said Opec was pumping at full capacity, well above daily output limits.

Oil prices have slipped from record levels but analysts warn that supply problems would push them back up.

Members of the Organisation of the Petroleum Exporting Countries will meet next month in Vienna to discuss their strategy.

Tightening up?

"During the June Opec meeting we must evaluate a production cut," Venezuela's Mr Ramirez said.

He added that Venezuela would do "whatever is necessary to defend the price of oil".

Opec members are supplying world markets with their utmost capacity
Bijan Zanganeh
Iran Oil Minister

Venezuelan President Hugo Chavez, who is using oil revenues to fund ambitious social reforms and spending projects, said earlier this month that Opec oil should be fetching between $40 and $60 a barrel.

On Friday, it was trading at just below $45.

Opec has been keen to point out that there is precious little extra oil to be wrung out of its already overworked fields.

Iran is Opec's second biggest producer and Mr Zanganeh was quoted on the oil ministry website as saying: "Opec members are supplying world markets with their utmost capacity."

Pump power

Currently Opec is pumping about one million barrels above its official 27.5 million barrels per day (bpd) target. Another two million bpd from Iraq are not included in the quota figures.

The group increased production in mid-March to help ease supply problems that many analysts were blaming for a spike in prices.

Some analysts have predicted that any dip in costs is likely to be short-lived - Goldman Sachs says prices may hit $105 a barrel.

Underpinning prices will be demand, especially from developing nations such as China and India.

Sheik Ahmed Fahd Al Ahmed Al Sabah, Kuwait's Oil Minister and current Opec president said that global demand will rise to 85.5 million bpd during the last three months of this year.

To ensure there are no supply problems, Opec needs to investing to boost output, he said.

A key area the minister identified was boosting oil refining capacity to relieve bottlenecks, particularly in the US.

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