OPEC to increase daily output by 500,000 barrels to quell oil price

The Organization of the Petroleum Exporting Countries (OPEC) announced on Wednesday an increase of its crude output by 500,000 barrels per day (bpd) to 28 million bpd starting from July to quell the surging oil price.

In a statement released after a ministerial conference here, the group also said that if the international oil price remains high till its next ministerial meeting in September, it will consider another daily output increase of 500,000 barrels.

After discussing the demand and supply situation in the world crude oil market, the conference agreed that the bloc's action in March to raise the crude oil daily output ceiling by 500,000 barrels has been effective.

However, the conference blamed a lack of effective global oil refining capacity, geopolitical factors and speculation on the futures market of crude oil for the high and volatile world crude oil prices, saying the world crude oil market has been sufficiently supplied.

Refineries, while already running at full capacity, are facing difficulties in coping with strong distillate demand-growth, the meeting said.

OPEC reiterated that it will continue to watch closely the changes in the market and take necessary actions to ensure stable global crude oil supply and prices.

After the meeting, OPEC President Sheik Ahmed Fahd al Ahmed al Sabah told the press that OPEC will get prepared for the strong global oil demand in the remainder of the year, in particular in the fourth quarter. He believed that OPEC could ensure oil supply for the fourth quarter.

According to the data released by the OPEC Secretariat on Wednesday, the group's average basket price of seven crude oils under market surveillance reached 52.05 US dollars per barrel on Tuesday, up 1.22 dollars from the pervious trading day.

Analysts warned that the decision to raise the output ceiling to 28 million bpd could not have much impact on the surging oil prices, as the group's actual daily output, not counting Iraq, has already exceeded that quota.

They said crude oil prices may exceed 60 dollars per barrel in the coming fall.

Source: Xinhua