London (Platts)--9Jun2008

OPEC has a tacit understanding that those members capable of boosting
crude production should supply as much crude as world oil markets need, a
senior OPEC delegate said Monday, adding that some countries are already
raising output.
"They are already raising their production," the delegate said, asked

whether OPEC was likely to decide to increase output at its September 9
meeting.

"Right now, OPEC's understanding is that those who are able to do it will
supply what the market needs," he said, adding: "The ceiling and the quotas
are becoming irrelevant right now."

The delegate insisted, however, that markets are adequately supplied and
consumer inventories at comfortable levels.

Oil prices, which traded at a new record of $139.12/barrel last Friday in
New York, are being driven by the futures market, which in turn was being
influenced by a combination of non-fundamental factors including geopolitics,
financial market movements and the fear of future supply disruption.

"There is enough supply. Stocks are very comfortable. The price right now
is not a question of the short-term fundamentals. The market is guided by the
futures market," he said.

Referring to last Friday's $11/b rise in the price of US light crude
futures, the delegate said: "$11/b is really a lot, the biggest ever one-day
increase in the oil price. It had nothing to do with the actual situation of
the market."

He added that it is difficult to say whether the current surge, which has
taken crude prices to within sight of $140/b, is "a bubble" or a temporary
phenomenon.

"Your guess is as good as mine," he said. But, he said, oil prices would
probably fall back if non-oil investment funds moved away from oil futures.

"What brought them to oil is fear," he said.

OPEC's current output target is 29.673 million b/d for the 12
members -- not including Iraq -- bound by output agreements. Independent
estimates have shown OPEC-12 production comfortably exceeding this target in
January, February and March.

But in April, following a dip in Nigerian supply because of a strike by
ExxonMobil workers, it fell below the target, according to estimates. The
International Energy Agency estimated OPEC-12 output for the month at 29.54
million b/d.

Saudi Arabian oil minister Ali Naimi announced during US President George
Bush's visit to the kingdom last month that as a result of higher demand,
mainly from US customers, Saudi crude production would rise by 300,000 b/d to
9.45 million b/d in June -- more than 500,000 b/d above Riyadh's 8.943 million
b/d OPEC target.