OPEC Presses Non-OPEC for More Oil
OPEC said on Wednesday it will ask producers outside the cartel to raise output to help cool high prices, but got a quick reply from Russia saying it had no slack in its system to boost exports.
OPEC president Purnomo Yusgiantoro said he will write to Russia, Angola, Mexico and Oman to request they pump more crude after Iraqi exports were knocked out by sabotage and prices have stayed stuck above $35 a barrel, depite an injection of extra OPEC barrels.
"They have spare capacity to increase production," Purnomo, also Indonesian oil minister, told reporters. He did not give any details or timeframe.
The Interfax news agency quoted Moscow's number two oil official as saying that Russia had no spare capacity.
"We don't have a tap that we can just turn on and off. We are producing exactly as much as we can," said Sergei Oganesyan.
Russia is the biggest non-OPEC producer with output of around nine million bpd. Together with Angola, Oman and Mexico, the producers pump 14.64 million bpd, or 18 percent of world supply.
Mexico has already said it aims to increase crude exports to 1.95 million bpd from 1.88 million by the second half of 2004, while Oman is struggling to arrest a steep decline in its output due to aging fields.
A government official said in April it would spend $727 million this year to stem the output decline, which has seen crude flows drop to 760,000 bpd from 900,000 bpd in 2001.
The Organization of the Petroleum Exporting Countries agreed on June 3 to increase formal supply limits by two million bpd from July 1 and by another 500,000 from August 1 to stop a run-up in oil prices to the highest levels in 21 years above $42 a barrel.
Although prices have eased from the peaks, the market headed higher again on Wednesday after saboteurs attacked oil pipelines in Iraq, knocking out the country's crude exports.
U.S. crude (CLc1: Quote, Profile, Research) climbed 29 cents to $37.48 a barrel.
Iraq, an OPEC member, had been exporting 1.6 million to 1.7 million barrels a day (bpd), mostly from the southern oil terminal Basra.
Fears that militants would strike at oil facilities in the Middle East have pushed prices higher this year. Robust economic growth and strong oil demand, especially in the United States and China, have left little room in the supply chain for any disruption in a major producer.
Tanker tracking consultancy Petrologistics estimates OPEC's 10 core members, excluding Iraq, will lift supplies by 800,000 bpd in June, before the increase of formal limits next month.
Petrologistics estimates OPEC 10 output for June at 27.4 million bpd, just 500,000 bpd short of what the International Energy Agency says is the group's sustainable capacity.
What do you think? Leave a comment below. See our commenting guidelines.
Sign up for regular Resilience bulletins direct to your email.