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OPEC to pump more oil

Ministers of the eleven oil-exporting nations of OPEC, meeting in the Indonesian capital, Jakarta, have reached agreement on raising production ceilings.

The OPEC Secretary-General, Rilwanu Lukman, said the current ceiling of 25 million barrels a day would be raised by 10%.

The agreement results from the first major attempt in four years to increase production quotas. Analysts say the current ceiling has been widely ignored and the new limit is nearer to the real level of supply.

OPEC accounts for almost 40% world oil production.

According to oil industry analysts, Saudi Arabia had been pushing for an increase, despite the opposition of some fellow OPEC members.

Saudi Arabia, the world's biggest oil producer, accounts for 32% of OPEC's share.

However, delicate questions remain about how much the world can consume without pushing prices sharply lower.

Libya's Energy Minister Abdallah Salem al-Badri opposed any increase in OPEC's stated output.

Iran, the second biggest player in OPEC after Saudi Arabia, said the production ceiling should stay below 26.5 million and argued that economic crises in the Far East would hit demand.

An added complication, say analysts, is the position of Iraq.

If Iraq renews its oil-for-food deal with the United Nations, the market may not be able to absorb the extra output without a sharp drop in prices.

The UN agreement allows Iraq, which was prevented from exporting oil under sanctions in place after it invaded Kuwait, to ship up to two billion dollars' worth of oil over six months.

Only three OPEC members have the capacity to increase their current output - Saudi Arabia, Kuwait and the United Arab Emirates.

All three have slightly exceeded their quotas in recent months.

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