|Suspension of OPEC quotas is an option at Beirut meeting (Daily Star)
|Other alternatives to calm market not ruled out
Organization likely to consider increasing its allowance ceiling by 2 million bpd, or even 2.5 million bpd, to curb soaring oil prices
A suspension of OPEC production quotas is an option that may be discussed at a ministerial meeting of the cartel in Beirut next week, a source close to the organization said Friday."Suspending quotas could be one of the options available to the organization to send a strong message to the markets that OPEC is doing something real big to curb oil prices," he said.
"OPEC has not ruled out any possible alternative to calm the oil market and curb the oil prices," which have shot up to historic highs in the last few weeks," the source said. "If it takes suspending the quotas, OPEC will seriously consider that. But nothing has been actually discussed formally."
His comments were in line with a report Friday in the Wall Street Journal's European edition saying producers in OPEC could allow each member to put as much oil as it wanted on the market, which would in effect mean a suspension of the output quota mechanism, to bring prices back below $40 a barrel.
The source said that a suspension would not be significantly different from a straightforward increase of production quotas, which total 23.5 million barrels per day (bpd), and should not cause any upset."Our commitment has not changed and will never change. We have a mission, we have a clear vision and a clear mission. We need to stabilize the oil market, stability is in our interest and in the interest of the entire global community," the source said.
The organization was likely to consider increasing its quota ceiling by 2.0 million bpd to 2.5 million bpd. "If that's what the market needs to put the lid on the high oil prices, so be it," he said. "All this will be the subject of discussion during the market monitoring committee (meeting) on Wednesday evening."
However, he added, "I'm sure they will discuss that option and other options. I'm not saying it has been ruled out; we do not rule out any practical and working solutions." The full OPEC session will be held on Thursday, June 3, in the Lebanese capital.
On Thursday of this week, OPEC President Purnomo Yusgiantoro of Indonesia mentioned three options but did not refer to a suspension of quotas. The first was to increase quotas by 2.0 million bpd, which would not increase supply, the second to increase by 2.3 million bpd, which would authorize production beyond quotas that are already in effect, and the third to increase quotas significantly.
The Journal reported that a suspension of quotas could be matched by a significant increase in the targeted price range of $22-$28 per barrel. Many OPEC members have been calling for this for months to compensate for a fall of the value of the dollar. - AFP
Crude prices increase after heavy profit-taking
World oil prices regained upward momentum Friday after a heavy bout of midweek profit-taking, and dealers said it was too early to call time on oil's record-breaking rally.
US light crude closed up $0.49 at $39.93 a barrel after Thursday's dollar dive. London Brent crude ended up $0.35 at $36.60 a barrel.
Oil has eased from a recent US record $41.85 peak as the Organization of the Petroleum Exporting Countries considers a big increase in output limits at a meeting in Beirut on June 3.
The Daily Star