OPEC: Can Do No More to Ease Oil Prices

abcnews.go.com — By Knut Engelmann

DAVOS (Reuters) - OPEC on Friday said it could do no more to rein in runaway world oil prices, blunting hopes the cartel might be prepared to pump more crude if the United States launches war on Iraq.

Organization of the Petroleum Exporting Countries Secretary-General Alvaro Silva said the group already was pumping enough but could not counter the impact of the threat of war on oil prices.

"What can we do more? I do not agree there is a lack of oil," Silva told reporters in Davos on the sidelines of the annual World Economic Forum.

"The problem of the price is the threat of war."

War fever and a seven-week-old general strike that has cut exports from OPEC nation Venezuela sent U.S. oil prices to a two-year peak of $35.20 a barrel this week. U.S. crude traded at $32.32 on Friday.

OPEC aims to keep prices for a basket of its crude in a $22-$28 range and has just raised production quotas by 1.5 million barrels a day, seven percent, effective February 1.

"The price is over $28 and we are making every effort to put the price back in the band," said Silva. "We are doing our best to get it there."

OPEC's problem is that most of its member countries already are pumping at full capacity.

Only Saudi Arabia and the United Arab Emirates are believed able to open the taps any further.

Saudi Ambassador to the United States Prince Bandar bin Sultan said this week that Riyadh was willing to raise production unilaterally if oil prices do not ease soon.

Saudi Arabia's new OPEC quota from February was set at 7.963 million bpd, but the kingdom is expected to be pumping between 8.5-9.0 million bpd in the next few weeks, industry sources said earlier this week.

Saudi Oil Minister Ali al-Naimi has made clear that Riyadh is capable if necessary of ramping up flows to 10 million bpd within weeks.

If OPEC cannot cope and war on Iraq cuts Baghdad's exports while Venezuelan supplies remain slow, consumer countries may need to release emergency strategic reserves for the first time since the 1990-1991 Gulf War.

The International Energy Agency in Paris has said it is prepared to consider ordering a release from the huge stocks held by its 26 industrialized member countries.