OPEC Could Increase Production

Speculation is increasing that OPEC will begin to increase production in an attempt to keep oil prices level. Crude oil prices have risen in recent weeks due to speculation about the US attacking Iraq. This has increased fears about what would happen to oil supplies in the Middle East if a war were started.

In the past two days, both OPEC sources in Vienna and senior sources in Gulf Arab countries have suggested the group might lift production by up to 750,000 barrels a day. Analysts say an output increase of this magnitude would not substantially alter the balance of world supply and demand but would send a signal that OPEC was prepared to act to calm nervous markets. It would also be a conciliatory move towards the US, the world's biggest oil consumer and a major importer of Middle East oil.

Any increase in production quotas would be announced at the meeting in Japan on September 19th. An OPEC official said he believed Saudi Arabia would push for an increase in September and a compromise of a modest boost to supplies - 500,000-750,000 barrels per day - was the likely outcome. Other OPEC members such as Iran Kuwait, Venezuela and Indonesia have spoken out in recent days against the need for changes. Currently OPEC has limited production to 21.7 million barrels per day.