OPEC considers production increase

GENEVA (Reuters) – OPEC could next week agree its first formal increase in supply targets since 2007 when it meets to hammer out its response to Arab world turmoil, extreme market volatility and pressure from the West for action.

One OPEC delegate told Reuters Thursday the producer group might raise its collective target by as much as 1.5 million barrels per day (bpd) at talks in Vienna on June 8, its first official meeting this year.

In the context of higher than usual tension between some OPEC members, the easiest outcome would still be to maintain existing supply policy and for leading producer Saudi Arabia to carry on making unilateral changes to its output.

But some analysts say the Organization of the Petroleum Exporting Countries risks being irrelevant unless it moves on from a record cut agreed in December 2008 when oil fell below $40, the world was in deep financial crisis and demand had collapsed.

“Production is so out of kilter now with the original agreement (that) if they want to achieve any credibility, they need to do something,” said Bill Farren-Price of Petroleum Policy Intelligence.

The 11 members of the group bound by OPEC production targets pumped 26.23 million bpd in May, nearly 1.4 million bpd above their 24.84 million bpd target.