OPEC Output Quota May Rise

OPEC may boost its crude output quota by 500,000 barrels a day in May and add another half a million barrels in the third quarter in a bid to stop record oil prices from slowing economic growth, the group’s president said.

“Prices should remain within a reasonable range to prevent a slowdown in economic growth,” Sheik Ahmed Fahd al Ahmed al Sabah said during an energy forum in Kuwait City on Saturday. “Because prices are at a record, we expect to resume discussions this coming week to add 500,000 barrels a day starting May.”

The Organization of the Petroleum Exporting Countries, supplier of more than a third of the world’s crude, is pumping more than its limit to bring down crude prices, which reached an all-time intraday trading high of $57.70 a barrel in New York on Friday, before closing at a record $57.27 a barrel.

High oil prices contributed to slowing job growth and faster inflation in the U.S. in March, signs that the economy may be slowing.

“Oil prices could reach $60 if the group doesn’t calm the market and increase supply,” said Ahmed Fahd, who is also Kuwait’s oil minister.

Market fears of supply disruptions are driving up prices, he said.

OPEC states with quotas, all except Iraq, are now producing close to 28 million barrels a day, which is 500,000 barrels above the current output quota, Ahmed Fahd said.

The group has spare capacity of 2 million barrels a day, and this will rise to 3 million barrels by the end of the year as members boost their capabilities.

Crude prices of $55 a barrel have slowed growth in countries such as the U.S. and China, the world’s largest oil consumers, said William Ramsay, deputy director of the International Energy Agency. The Paris-based agency advises 26 oil-importing countries on energy policy.

“Just because these countries continue to grow doesn’t mean oil price increases haven’t affected them,” Ramsay said.

OPEC might raise its oil output quota by 500,000 barrels a day in the third quarter and make further increases in the fourth quarter, Ahmed Fahd said, without specifying the size of the potential fourth-quarter increase.

The 11-member group agreed in mid-March to boost its official output quota by 500,000 barrels a day to 27.5 million barrels and pledged to add half a million barrels a day more as early as May, if prices rose and demand warranted more supply.

Saudi Arabia, the group’s largest producer, has said it is prepared to raise output by 1.5 million barrels a day to its maximum capacity of 11 million barrels a day to meet any unexpected rise in demand.

The International Energy Agency is preparing a study on energy-saving measures that oil importers could implement in the transportation industry to lower fuel consumption as oil prices rise, Ramsay said.

Gasoline futures surged Friday in anticipation of the summer driving season in the U.S. About 10% of the world’s crude oil is used to make gasoline for U.S. motorists.