OPEC likely to wait until June for formal ceiling hike: President

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."

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