VIENNA, Austria – With its clout and credibility at stake, OPEC leaders said Tuesday they will attempt to lower soaring oil prices by raising the cartel’s production target.
But economists dismissed the move to lift the official quota to 28 million barrels a day, noting that the 10 member nations bound by it are already pumping that much. They said oil markets – and drivers suffering sticker-shock at the gas pumps – are unlikely to see much of a difference if the Organization of Petroleum Exporting Countries takes the expected step at its meeting today.
“Even if OPEC decides to raise its output ceiling, it won’t ease fears of tight supply toward the end of the year,” warned Paul Horsnell, head of energy research at Barclays Capital in London.
OPEC President Sheik Ahmed Fahd Al Ahmed Al Sabah of Kuwait said Tuesday the group had little choice but to act with prices so stubbornly high.
“Whenever it’s over $50 (per barrel), we have to react,” he said. “The market is well-supplied, but we have to do everything we can to make more reasonable prices.”
Key OPEC members expressed support for boosting the output ceiling by 500,000 barrels a day, and some suggested they might be willing to raise it by another 500,000 barrels later this year.
Analysts, however, characterized the shift as purely symbolic. Some wondered whether the group had the pull to bring prices – which have hovered around $55 per barrel – back below the psychologically important $50 threshold.
OPEC contends that it sees the most benefit from prices in the $40 to $50 range. The group has no interest in seeing prices plummet, but also wants to keep buyers from turning to producers outside the 11-nation cartel.
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