OPEC considering boost in output

Cartel hopes to ease worries of oil shortage Associated Press Last Updated: Jan. 7, 2003

London - Hoping to ease fears of a possible oil shortage, OPEC representatives plan an emergency meeting this weekend to discuss boosting the cartel's crude production by up to 6.5%, an OPEC official said Tuesday.

Oil prices have surged in recent weeks on concerns about deepening turmoil in Venezuela and a possible war against Iraq - two key members of the Organization of Petroleum Exporting Countries. The group is now weighing proposals to increase output by as much as 1.5 million barrels a day in an effort to dampen prices.

An increase in production would represent an abrupt reversal in OPEC policy. OPEC's 11 members decided less than a month ago to slash output by up to 1.7 million barrels a day in the hope of preventing a price decline when seasonal demand dips in spring.

Ministers of each member country except Algeria have agreed to meet Sunday at the group's headquarters in Vienna, Austria, the official said. Algerian minister Chakib Khelil was aboard a plane late Tuesday and could not be reached to confirm if he could attend, said the official, speaking on condition of anonymity.

Since OPEC's decision Dec. 12 to cut production, worrisome signs of a potential shortage have begun to appear.

Oil shipments from Venezuela, normally OPEC's third-largest producer, have dwindled by some 80% because of a month-old strike aimed at forcing the country's president, Hugo Chavez, from office. A U.S.-led attack on Iraq would halt exports from that country, which has the world's second-biggest crude reserves after Saudi Arabia.

OPEC officials have said the group cannot pump enough additional crude to make up for a simultaneous loss of exports from Venezuela and Iraq, which together have historically exported roughly 4 million barrels a day. OPEC's remaining members have spare production capacity of 3.3 million barrels a day, according to the Paris-based International Energy Agency, the West's energy watchdog.

Market fears have driven crude prices well above the psychologically important threshold of $30 a barrel as a result.

OPEC supplies about one-third of the world's crude. Iraq is a member but doesn't participate in the group's production agreements because the United Nations oversees the bulk of its exports.

Saudi Arabia, OPEC's most influential member, has proposed that the group raise output by 1.5 million barrels a day.