London : The International Monetary Fund will recommend that Opec more than double its spare capacity to cushion the oil market against shocks, the Financial Times reported yesterday.
The newspaper said the IMF will warn in a report to be published next month that it considers Opec’s current level of spare capacity of around 1.5 million barrels per day to be insufficient.
In its World Economic Outlook report, the IMF will say Opec’s production cushion needs to rise to between 3 million and 5 million barrels per day, the newspaper said.
The report, intended for release at the IMF’s spring meeting, warns that the oil market is exposed to a “significant upside price risk” and is highly vulnerable to a crisis, the newspaper said.
The IMF predicts the oil market will remain tight until 2010, with demand for Opec oil increasing slowly, it said.
Opec, the Organisation of the Petroleum Exporting Countries, meets in Iran next week amid concern over high oil prices.
US crude oil prices came within pennies of their record peak on Wednesday before slipping back, as worries over demand growth overshadowed rising stockpile levels in the United States.
London’s Brent crude closed 54 cents higher at $53.38 (Dh196.10) on the International Petroleum Exchange after hitting a new record of $54.30 (Dh199.48) a barrel.
Opec’s spare capacity used to be much higher but slipped to a three-decade low last year. The group has said it will rise again before the end of the year.
