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VIENNA (News Agencies)- It is reported that the Organization of the Petroleum Exporting Countries (OPEC) oil ministers gathered on Tuesday under pressure to raise exports for the second time this year to ease lofty crude prices. The meeting will be on Wednesday. Some in OPEC favor an output rise of about 900,000 barrels a day from July 1, OPEC delegates said. Top exporter Saudi Arabia believes an increase of that size is needed to bring prices, recently over $30 a barrel, down to the $25 level, satisfying both producers and major importers like the U.S. An increment of about 900,000 bpd would be enough to lift supply for 10 OPEC members nearly 3.5 percent from production quotas now standing at a combined 24.7 million barrels daily. "That should be enough to steady prices," said Peter Gignoux, head of the London energy desk at brokers Salomon Smith Barney. A seven percent OPEC increase in March failed to keep rising prices under control. Others, including Venezuela and Iran, want incremental supply restricted to nearer the 500,000 bpd mark. An increase that was to be added two weeks ago had the cartel chosen to implement a price stability mechanism agreed upon informally in March. "Lots of producers are worried about what would happen," Algerian Oil Minister Chakib Khelil said of a larger increase. There is reluctance among some in OPEC to sanction a big increment because, already producing to capacity, they would be unable to take advantage of higher quotas. Brent crude, the North Sea marker blend, has slipped in recent days in anticipation of extra OPEC oil and Tuesday was trading up six cents at $28.04. Outside the cartel, Mexico and Norway also are expected to announce additional supplies, amounting to a few hundred thousand barrels a day. Oil prices have remained stubbornly strong despite the extra oil sanctioned by OPEC last March after heavy pressure from its biggest customer, the U.S. Industry observers say only Saudi Arabia and its Gulf allies Kuwait and the United Arab Emirates hold significant spare capacity. OPEC looking for $25 Brent, believes oil at $30 a barrel is damagingly high. The worry is that consumers will switch to other fuels and dent demand for petroleum. World economic growth could slow as a result of high fuel costs. "We think that a good stable price of $25 for Brent is the best price," said Khelil. This time Washington has maintained a lower profile, after criticism that public intervention in March made Iran opt out of the OPEC deal. Iran may come back into the fold this time but whether it signs on the dotted line or not, Tehran has made clear that it will lift output anyway to avoid losing market share. While worldwide crude inventories remain low, industry data appears to show that stocks are building quickly. The International Energy Agency in Paris estimates oil stocks in the 77 million barrels daily world market will rise swiftly by 2.2 million during the second quarter. Most dealers agree that crude prices would be lower were it not for new environmental rules this summer in the United States that have restricted the pool of American gasoline supply. |
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