OPEC recently raised the quota to 26 million barrel per day (bopd) to quell a nervous market but the admission of extra production also confirms fears that the cartel has no surplus production left to counter price rise in the short term or to meet any supply fears.
As the future of Russian oil giant Yukos hangs in the balance many analysts would have looked to OPEC to make up for any shortfall should exports from Siberia be cut off.
Russian authorities want to seize and sell Yukos' main Siberian oil business, OAO Yuganskneftegaz, to pay a US$3.4 billion tax bill, a move that Yukos said will bankrupt it. The Siberian business pumps about one million barrels a day, or 1.2% of world oil supply.
Now Purnomo has been forced to quash supply fears by announcing that all the member states had agreed to increase their overall production capacity by 10%.
“In addition to opening their taps in response to market demand, OPEC member countries are investing vast resources to increase production capacity by an estimated 2.5-3 million barrels a day in the short term, depending on the call on OPEC oil,” said Purnomo.
On Friday crude oil for September delivery rose 78 cents to settle at US$41.36 a barrel on the New York Mercantile Exchange, a 16% rise in the last three weeks.
