OPEC won't shy away from raising output if required: source

OPEC won't shy away from raising output if required: source

London (Platts)--30Jun2005


OPEC ministers have put their consultations on a second 500,000 b/d increase
in the group's formal crude output ceiling on hold, believing the market needs
more time to consider the first 500,000 b/d hike, which goes into effect
Friday, an OPEC source said Thursday. 

OPEC on Jun 15 agreed to raise its ceiling by a half-million barrels to 28-mil
b/d from July 1 and to consider a second hike of the same amount if warranted.
If required, ministers could decide in a month's time to implement the second
increase to take the ceiling to 28.5-mil b/d, the source said, adding that the
group would not shy away from raising output if the market needs more oil. 

"My understanding is the consultations will be put on hold for now," the
source said. "What OPEC is trying to do is reassess the decision made on Jun
15 and give the market more time to digest that decision. If needs be, in a
month or so, the second stage of the output hike could be implemented," he
said. "If there is a need for an output hike I do not think [OPEC] will shy
away from it."

OPEC President Sheikh Ahmed Fahed al-Sabah on Monday said the group was likely
to decide this week whether to implement the second stage of a possible 1-mil
b/d increase in its crude production ceiling. Venezuelan oil minister Rafael
Ramirez said Wednesday he did not support the implementation of the second
500,000 b/d ceiling increase. "The problems do not lie in increasing and
increasing production, that is our policy. There are structural problems in
the market, serious refining problems, speculative ones, and OPEC
countries--despite a major effort--have limited (output) capacity," Ramirez
told reporters. "We don't think that [boosting output] will contribute
anything to this situation."

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