OPEC to discuss production hike today in Beirut

By Alex Lawler and Sean Evers
Bloomberg News Service

OPEC, the source of more than a third of the world's oil, may agree today to raise supply by 1 million barrels a day to stem price gains that may slow a global economic recovery, Kuwait's oil minister said.

The Organization of Petroleum Exporting Countries plans to raise its official production target at a meeting today in Beirut. The new quota would include existing overproduction plus new supply, about 90 percent of which would come from Saudi Arabia, Kuwait and the United Arab Emirates, Kuwait's Sheikh Ahmad Fahd al-Ahmad al-Sabah said in an interview.

Crude oil in New York fell 5.6 percent yesterday as the 11-nation exporters group prepared for the meeting. Prices remain 32 percent higher than a year ago, raising costs for airlines, utilities and factories, and triggering calls for more OPEC oil from the United States, Canada and countries in Europe.

"What the market wants to know is how many real barrels are we going to get," said Nauman Barakat, senior vice president at Refco Energy Markets in New York. "You're probably going to see a million real barrels."

Crude oil in New York has gained 25 percent so far this year and reached a record $42.45 yesterday before plunging to $39.96 a barrel, down $2.37. Oil for July delivery traded at $40.53 in after-hours electronic trading on the New York Mercantile Exchange at 12:46 p.m. Singapore time.

The producer group is near consensus to boost their output quota by 2.5 million barrels to 26 million barrels a day for the 10 members other than Iraq bound by the quota system, the energy ministers of Kuwait, United Arab Emirates and Qatar said yesterday.

Some members already are exceeding their targets, so the effective increase by the 10 OPEC nations with quotas this month may range from 800,000 to 1 million barrels a day, from 25.7 million barrels a day produced in May.