OPEC to raise production ceiling by 500,000 bpd

Oil cartel OPEC is to add 500,000 bpd more to its production ceiling by end of this month, said an OPEC official as quoted by IRNA.

The OPEC Secretariat official told IRNA that officials of 11 OPEC members are negotiating a 500,000 bpd boost in the output of the organization to balance prices on the markets.

The source said the OPEC's official production ceiling stands at 28,400,000 bpd but the members are overproducing by more than 1.5 million bpd.

Kuwaiti Oil Minister and the OPEC president Sheikh Fahd Ahmad al-Sabah confirmed the ongoing consultations on the output increase, saying with approach of the cold season, demand for crude will rise on the markets and the OPEC is going to raise the ceiling to help build up understanding with consumers.

The OPEC president said the OPEC ministers will in their future meeting assess different mechanisms to adjust the prices.

The OPEC meeting is to be held in Vienna on September 19.

Saudi Arabia, Kuwait, Indonesia and Qatar are among proponent of output rise, while Venezuela is against such an increase on the ground that the cartel has not the sufficient capacity for such an increase.

The devastating Hurricane Katrina in the U.S. has leveled many oil facilities in the country, hampering transfer of oil from Gulf of Mexico. Hence, the crude prices started to go up on the markets from middle of last week, reaching $70.85 a barrel.

Based on the reports available, crude production in the Gulf of Mexico has fallen by 42 percent to 633,000 bpd compared to the figure before the hurricane.

Many drilling facilities set up in the Gulf of Mexico are no longer usable and should be scrapped after the hurricane subsides. The hurricane is estimated to have inflicted more than $100 billion in damage on the U.S.(*)