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Last Update: Sunday, May 23, 2004. 7:06am (AEST)

OPEC opts against immediate boost to output
Oil cartel OPEC has put off a decision on a Saudi Arabian proposal to raise oil output until its next official meeting in June.

The Saudi plan was devised in an effort to reduce surging prices.

Saudi Arabia was responding to the worries of governments and consumers about surging oil prices with its proposal to raise output but its move did not win immediate support from other OPEC countries.

Flexing its muscles as the world's biggest oil producer, the kingdom proposed to boost OPEC production by more than 2 million barrels a day, provoking a mixed reaction from within the cartel.

OPEC ministers were meeting in Amsterdam for an informal meeting on the sidelines of a world energy summit amid mounting calls for urgent action to bring down oil prices.

"The decision will be made in Beirut," said OPEC president Purnomo Yusgiantoro, referring to the cartel's next official meeting in the Lebanese capital on June 3.

Mr Yusgiantoro, who is also Indonesia's energy minister, told reporters that OPEC ministers were "deeply concerned" by the sharp rise in the price of oil.

Despite such concerns, the other OPEC members said they were not prepared to make an official decision to raise production in an informal setting.

Some countries even appeared annoyed at the fait accompli put to them by Saudi Arabia, which is the cartel's most influential member.

Venezuelan Energy Minister Rafael Ramirez said the proposal was a "unilateral position".

On Friday, Saudi Oil Minister Ali al-Naimi's proposal to raise production sent oil prices sliding on global markets, even though some people voiced surprise the reaction was not stronger still.

New York's benchmark contract, light sweet crude for delivery in July, fell nearly $US1.00, dropping below the psychologically important $US40 level.

While the Saudi offer did not win immediate support from the rest of OPEC, Mr Naimi stood firm by his proposal.

"Never doubt what Saudi Arabia says," he told journalists.

Big oil-consuming countries have been pressuring OPEC in the run-up to the meeting to make more crude available to markets so the oil price does not thwart the fragile global economic recovery.

OPEC president Mr Yusgiantoro said the ministers examined the proposals from Riyadh "in line with OPEC's commitment to do whatever we can to ensure market stability and to ensure adequate supply to support world economic growth".

According to the cartel, the current high crude oil prices were the result of a combination of several factors such as petrol bottlenecks and increased tensions in the Middle East and Iraq.

He also called on non-OPEC oil producing countries to "cooperate with us to stabilise rising prices".

Welcoming OPEC discussions about higher oil production, US Energy Secretary Spencer Abraham said "now the question is what action will follow" and also called for "strong action from producers".

International Energy Agency head Claude Mandil, whose organisation represents the interests of big oil consuming nations, gave a cautious response to OPEC's decision to wait to June to review production.

Mr Mandil has repeatedly called for OPEC to increase production and said it was "understandable" for the cartel to wait until the Beirut meeting to make a firm decision on output.

Dutch Economic Affairs Minister Laurens Jan Brinkhost, who was hosting the International Energy Forum bringing together top officials from about 55 oil producing and consuming countries plus 11 international organisations, hailed Saudi Arabia's proposal.

"It is a recognition that supply matters," he said.

Part of the Saudi proposal was also for the kingdom alone to provide 9 million barrels per day (bpd) to its customers from June.

Saudi Arabia has an OPEC quota of about 7.6 million bpd but is believed to be exceeding this.

On Saturday, the minister said his country had a production capacity of 10.5 million bpd.

-- AFP