OPEC's president said Sunday that the group needs to increase its output ceiling now despite oversupply in the crude oil market, and may need to act again as U.S. refineries come back on line and the Northern Hemisphere's winter looms.
"We think we need to send a message to everybody there will be extra oil in the market _ we've accepted the idea _ to stabilize the price," said Sheik Ahmed Fahd Al Ahmed Al Sabah, who is also Kuwait's oil minister.
OPEC is poised to increase its output ceiling, currently 28 million barrels a day, by 500,000 barrels a day, or 2 percent, at its meeting here Tuesday.
Al Sabah said that while the market was currently oversupplied by 1.5 million barrels a day, and there are signs demand for crude is slowing, a further increase of the output ceiling may be needed as the typically high-demand winter season approaches and refining capacity knocked out by Hurricane Katrina is restored.
Previous OPEC moves have done little to ease market fears over supply, and any increase is widely regarded as meaningless because it merely sanctions existing production.
With oil prices about 50 percent higher than a year ago and motorists feeling the increase at the gas pump, the ministers have repeatedly said that OPEC is concerned and are doing all it can to keep the market well-supplied and prices stable.
But concern that high prices have weakened oil demand has dampened prices, which had soared above US$70 a barrel on concern about production outages caused by Hurricane Katrina, instability in Iraq and the upcoming winter season.
There appears to be increasing volumes of unsold heavy, sour crude that the U.S. doesn't need, creating a dilemma for OPEC _ the group must appear to be doing all it can to alleviate the pain consumers are feeling, while risking sharper crude price declines from the backwash of crude caused in part by Katrina.
Adding to international pressure on OPEC, the European Commission said European Energy Commissioner Andris Piebalgs will meet Al Sabah on Sunday to discuss high oil prices and their effects on the European economy.
In response, the International Energy Agency this month agreed to release 2 million barrels a day of crude oil, gasoline and other fuels on to the world market from their strategic stockpiles over the ensuing 30 days. That is equal to about 2.4 percent of the world's daily fuel consumption, reported AP.