The Organisation of the Petroleum Exporting Countries has yet to change its production policy officially, even though it has been boosting supply informally for months and Saudi Arabia has offered to help make up for the loss of around two-thirds of Libya’s output.

An official increase in OPEC output would signal the group’s determination to put a cap on prices after uprisings and unrest across North Africa and the Middle East sent oil to its highest in more than two and a half years.
Fighting in Libya has idled around 1 million barrels per day (bpd), with the key Libyan oil ports of Ras Lanuf and Brega in the east of the country closed, and consumers have been looking for a response from OPEC.

At one point, US light crude futures were US$1.45 lower at US$103.99. Brent crude dropped to a low of US$112.23 per barrel, down US$2.81, by midnight (Singapore time). On Feb 24, Brent hit US$119.79, its highest since 2008, when it reached an all-time high of US$147.50.
Brent’s premium over US crude shrank below US$9 yesterday, down from more than US$17 at its peak last week.
“We are in consultations about a potential output increase,” said Kuwait’s Sheikh Ahmad Al Abdullah Al Sabah, but he added the group had taken no decision yet to produce more than its existing output targets.

Iran, which holds OPEC’s rotating presidency, said there was no need for a boost in production as worries over supply were mostly “psychological”.
“There is no shortage in the market. There is no need for further OPEC supply,” Iran’s OPEC governor Mohammad Ali Khatibi told Reuters yesterday, pointing to a difference of opinion among members.

Saudi Arabia, the world’s largest oil exporter and home to most of OPEC’s spare capacity, has boosted oil production to fill the gap left by Libyan exports and is now pumping about 9 million bpd, almost 1 million bpd above its OPEC quota.