OPEC chief wants to boost output

The Associated Press

OPEC must boost oil output further to make a “really significant impact” on surging crude prices, the group’s president said June 2, even though it is pumping close to capacity already.

The Organization of Petroleum Exporting Countries needs to assess its 11 members’ ability to produce more now that prices for oil futures contracts have hit new highs after a terror attack in Saudi Arabia at the end of May, OPEC President Purnomo Yusgiantoro told reporters. He spoke upon arrival in Beirut for talks ahead of a formal OPEC meeting on production policy June 3.

The weekend attack on oil-related offices and foreign workers in the eastern Saudi oil hub of Khobar stoked fears the Saudi government, which controls the world’s largest proven crude reserves, cannot protect its vital oil installations.

“We are fully ready to increase production, but there is fear that the market will be overflooded,” Saudi Oil Minister Ali Naimi said. “So, therefore, we should be cautious about such action because this is what happened in 1997-98.”

The Khobar attack caused fresh alarm about the reliability of oil supplies from key Gulf producers. Saudi Arabia is the world’s leading crude exporter and the only producer with significant spare capacity to pump more oil.

Oil prices eased somewhat early June 2, slipping 37 cents to $41.96. That came a day after a surge on June 1, the first day of trading on major markets since the Khobar attack. U.S. light crude for July delivery climbed $2.45 to $42.33 per barrel — the highest settlement price in the contract’s 21-year history on the New York Mercantile Exchange.