OPEC will go ahead with a 500,000 barrel-a-day (bpd) increase to official production limits on August 1, president Purnomo Yusgiantoro said on Friday. "Our decision is in place, up until now we will still increase by 500,000 barrels a day (bpd) from August. This decision is still valid," Purnomo said. The Organisation of the Petroleum Exporting Countries (OPEC) agreed early in June to raise its output ceiling by 2 million bpd in July and a further smaller increase in August to cool prices, which had soared to a 21-year peak above $42 a barrel. The two increases would bring OPEC's production ceiling to 26 million bpd, excluding output from Iraq, which is estimated to run at about 1.8 million bpd.
Saudi Arabia, the world's biggest exporter and OPEC's most influential member, was quoted earlier this week as saying the August increase was not up for review when minister gather in Vienna on July 21 to review output policy. Although prices had come down from the highs, concerns over possible supply disruptions, especially in the volatile Middle East, and soaring demand have brought levels back again to the $40 mark for U.S. crude . Energy watchdog, the International Energy Agency, reckons world demand will grow at the fastest pace in 24 years in 2004, rising by 2.3 million bpd to a little over 81 million bpd. When asked whether OPEC might lift limits by more than 500,000 bpd if oil prices stay around $40 -- a level analysts say threatens to dampen global economic growth -- Purnomo said: "Up until now there is no proposal for that, but we will discuss at the next meeting how much demand has increased." OPEC, which controls half of global crude exports, have been pumping near capacity this year to stem this year's price rally. Market sources estimate the 10 OPEC members with quotas pumped 27.2 million bpd in June, 3.7 million bpd above the then output ceiling of 23.5 million bpd. Purnomo said OPEC ministers will discuss on July 21 whether to increase the group's $22 to $28 a barrel target price band, a reference basket of seven crudes.
OPEC's basket price has been above the upper limit since late last year and stood at $35.47 a barrel on Wednesday. Some OPEC members have said the target range should be increase to reflect this year's price surge. "There is an agenda. We will discuss the price band and we will look at the report from the long-term strategy team. We will discuss this on July 21," Purnomo said.///