OPEC likely to wait until June for formal ceiling hike: President
Kuwait City (Platts)--18Apr2005
OPEC is likely to raise production unofficially by 500,000 b/d in May to meet expected higher demand, but will defer talks on a formal increase in crude output quotas until its next meeting in June, OPEC president Sheikh Ahmed Fahed al-Sabah said Monday. "In May there will be an increase in production because demand in the third quarter will dictate that we'll increase production in order to guarantee the flow of oil to the market. There will be an automatic increase from the members without a resolution," Sheikh Ahmed told reporters in Kuwait City. At a meeting last month in Iran, OPEC ministers raised their ten-member ceiling by 500,000 b/d to 27.5-mil b/d, and also agreed in principle a further 500,000 b/d ceiling increase that could be implemented following consultations. Last week several OPEC ministers said they saw no reason for this second 500,000 b/d hike to be implemented yet, and Sheikh Ahmed said talks on the ceiling increase would likely wait until June. "For that, we cannot say this until we have our meeting in June," he said. "I think the market will ask for more crude and usually you work one month in advance. For that, I think if there will be a growth of demand, it will be in May and all the members will increase to reach their demand of the market in May. For that we believe there will be actual production of 500,000 b/d in May," Sheikh Ahmed said. "There is no specific day, but from the start of May orders will increase so countries must increase production," he added. But this increase, he reiterated, would not correspond to the formal 500,000 b/d ceiling hike ministers made provisions for at their meeting in Isfahan last month. "It won't be the decision of Isfahan. It won't be the decision with the consultations with the others... that 500,000 b/d will be because of the price," he said. "Prices now are going down [so this] is not giving us any reason to increase our [ceiling by] 500,000 b/d now." Read more about OPEC in Platts Guide http://www.platts.com/Oil/Resources/News%20Features/opec/index.xml.
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