Oil prices pull back from highs

Analysts are divided over where oil prices will go next

Oil prices have pulled back from record highs after a minister for producers' cartel Opec said the group may now consider boosting output.

After the comments by Nigeria's oil minister, US crude finished down 21 cents to $87.40 a barrel, while Brent lost 42 cents to $83.13.

Earlier on Wednesday, US light had touched as high as $89, while Brent crude had hit $83.80.

Oil prices had risen due to tensions between Turkey and Kurdish rebels.

Nigerian Oil Minister Odein Ajumogobia said Opec leaders could now meet as early as 17 November, three weeks ahead of their next planned meeting.

"We are still a month away and it depends what transpires before then," he added.

A report showing higher than expected US crude reserves also helped take the heat off oil prices.

Turkish deaths

The Turkish parliament has now authorised the use of force against Kurdish militants in northern Iraq, a move which could threaten oil supplies from the region.

Turkey's movement towards a military incursion into northern Iraq follows after 13 Turkish soldiers were killed earlier this month close to the Iraqi border.

Ankara estimates that 3,500 Kurdistan Workers' Party (KWP) rebels - who want to see the establishment of an independent Kurdish homeland - are based across the border in Iraq.

The market has not been as worried over a geopolitical issue since last July, when Israel and Hezbollah guerrillas battled in Lebanon, said Steve Rowles, an analyst with CFC Seymour in Hong Kong.

He predicted that "overall the tensions will eventually subside", saying that Iraq "isn't the oil producer that it once was".

Oil prices have quadrupled since 2002 because of strong demand from fast-growing economies such as China and India, allied to instability in oil-producing nations in the Middle East and Africa.

The cost of oil is still below the inflation-adjusted level of about $90 a barrel seen in 1980, when spiralling prices helped contribute to a recession in the US.

Last month, Opec said that it would be boosting its production by 500,000 barrels per day from the beginning of next month, to cope with resilient global demand for oil.