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Friday, 6 August, 2004, 11:15 GMT 12:15 UK

Opec production at '25-year high'

Purnomo Yusgiantoro Oil cartel Opec is pumping a record 30 million barrels a day, and could boost that by another 1-1.5 million barrels if needed, its president has said.

Purnomo Yusgiantoro, also oil minister of Indonesia, said the organisation's 11 members were 2 million barrels above the current 28 million barrel quota.

But any further increase would have to wait until September, he said.

Oil prices broke new records overnight as Asian trade pushed a barrel of New York light, sweet crude to $44.77.

That is 36 cents up from Tuesday's closing figure and the highest in the 21-year history of crude futures on the New York Mercantile Exchange.

In London, a barrel of Brent crude on Friday was at $41.50, a record for the contract since it started trading in 1988 on the International Petroleum Exchange.

Growth threat

The price could deal a severe blow to world economic growth, experts have warned.

Dr Fatih Birol, chief economist at the Paris-based International Energy Agency, told BBC News Online that oil at $35 a barrel - the average for the past year - would take half a percentage point off global growth.

He said countries heavily reliant on oil imports were most at risk.

"If oil prices remain at the same high levels it is going to have a negative impact," Dr Birol said.

Traders on the Nymex exchange in New York "If we do not see any real increases [in supply] from oil producing countries, and if geopolitical tensions continue, we have every reason to worry about even higher oil prices."

On Thursday, oil price concerns took the US Dow Jones index below 10,000 for the first time in two weeks.

Supply disruptions

Soaring demand both from the US, and in particular from China's fast-growing economy, combined with security fears, has been driving prices higher for months.

The renewed surge followed news that Russian authorities could be back-tracking on promises to lift an asset freeze on beleaguered oil giant Yukos.

The firm, which supplies one in five barrels of Russian oil and 2% of world output, could cease production unless it can access its accounts.

A fire at a major refinery in Texas - the third biggest in the US - also worried the markets, with investors well aware of just how tight supplies are.

Opec's 30 million barrel output, Mr Yusgiantoro acknowledges, includes 2 million barrels of over-production - a factor some see as a sign that there is little room for manoeuvre.

It also includes 2 million barrels from Iraq, a supply which is highly vulnerable to sabotage and other forms of disruption.



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