OPEC ready to do more as oil soars
U.S. futures hit record $44.73
LONDON, England -- As oil prices hit a fresh record high Friday, OPEC's head said the cartel is ready to lift its crude output by up to 1.5 million barrels a day next month.
The comments in Jakarta by OPEC president Purnomo Yusgiantoro came as oil prices hit fresh 21-year highs Friday, climbing close to $45 after a fire at a big U.S. refinery and a renewed threat to Russian oil giant Yukos.
U.S. light crude struck $44.77 a barrel, 36 cents up from Tuesday's settlement and the highest in the 21-year history of crude futures on the New York Mercantile Exchange.
London's Brent crude hit $41.50 a barrel, a record for the contract since it started trading in 1988 on the International Petroleum Exchange.
The surging oil price in New York and London also follows reports that Russian oil giant Yukos will not be allowed to use frozen funds to pay for its operations, further adding to supply tensions.
The 11-member Organization of Petroleum Exporting Countries (OPEC) is due to review its output limits when oil ministers meet in Vienna on September 15.
Purnomo, who is also Indonesia's Oil Minister, told reporters in Jakarta that OPEC is already pumping 30 million barrels of crude a day -- well above its revised official quota of 26 million bpd that took effect on August 1.
But he said that almost 2 million of the extra output was from Iraq.
Purnomo said the current over-production was in part because OPEC wanted to stabilize the oil market.
The price of oil has soared this year on a combination of sharply increased demand from China and other big consumers, and worries about disruption to supply through terrorism in the Middle East, and problems involving producers in Russia, Nigeria and Venezuela.
Saudi Arabia, the world's top exporter, is the only OPEC member with any significant spare capacity to increase supply. Iraq is struggling to rebuild its oil industry but its pipelines to shipping points are under constant threat of sabotage attacks.
"We are meeting in September and we are ready to increase production if it is necessary with immediate additional production between 1 million and 1.5 million bpd," Purnomo was quoted by Reuters news agency as saying.
Iraq's output is about 1.8 million barrels a day, but its pipelines remain vulnerable to sabotage.
According to Reuters, a survey of consultants, shippers, industry and OPEC sources pegged OPEC output at 29.52 million bpd in July.
Meanwhile, the news that the Russian government had overturned an earlier decision to unfreeze Yukos assets has renewed fears that exports could be affected.
On Thursday, Russia's Justice Ministry revoked permission for Yukos to use its bank accounts to finance daily operations and pay transport fees, news agencies reported. (Full story)
Oil prices have been on the rise since late July, fueled by fears over Yukos as well as the reliability of supplies from Iraq.
U.S. terror concerns also played a role after Washington heightened the alert for New York, New Jersey and Washington.
Perennial labor unrest in Nigeria and an upcoming presidential recall election in Venezuela are sparking concerns about oil production in those countries as well.
Oil prices have risen sharply since the early 2002 level of about $20 a barrel. But after adjusting for inflation, they are still well below the levels reached in the "oil shock" of the early 1980s.
According to the U.S. Department of Energy, the average price of oil in 1981 was $31.77 a barrel, or about $60 in 2004 dollars. The February 1981 peak price of $39.00 equals about $73.50 today.