A member of OPEC signaled for the first time in months that the oil cartel might increase its output if prices keep rising, even as oil hit another record on Friday. The comments from Libya's senior oil official, Shukri Ghanem, suggested a possible rift among OPEC members. Since the cartel's last meeting in March, the Organization of Petroleum Exporting Countries has argued that the market was not lacking in oil supplies and blamed speculators for driving up prices.In recent weeks, prices have come under renewed pressure because of a string of export disruptions from Nigeria. Crude oil for June delivery rose $2.32, or 1.9 percent, to $126.01 a barrel in New York trading on Friday. Prices have been above $100 since early February.
Since they last increased oil supplies in September, members of the Organization of the Petroleum Exporting Countries have abdicated most of their responsibilities toward the market, arguing that the higher prices had more to do with investment flows than with supply and demand. The problem for OPEC is that prices have become largely unhinged from real market factors. As the dollar declines and the economy slows, investment funds have moved into commodities like oil or gold, which they consider safer and more profitable than stocks.
But the political cost of rising energy prices, especially in the United States, which is in the midst of a presidential election, is making OPEC's position increasingly delicate. Economic growth in the United States has slowed and gasoline demand is set to fall this year for the first time since 1991.
At a meeting of oil producers and suppliers in Rome last month, many OPEC delegates, including the Saudi Arabian oil minister, Ali Al-Naimi, said there were not enough buyers to justify an increase in production. But some producers are becoming increasingly uneasy about the run-away prices and are finding it difficult to maintain OPEC's position.
"They are playing with fire," an analyst at Lehman Brothers, Adam Robinson, said. "Every time the price goes up, and we break a new psychological mark, they risk killing the goose that lays the golden egg. Their biggest fear is triggering something they can't control."
The group, which accounts for 40 percent of the world's oil exports, is not scheduled to meet until September. At its March gathering, OPEC ignored calls from President George W. Bush and other industrialized leaders to bolster production, opting instead to keep output steady.
"We would consider among other options the possibility of increasing output as a way to ensure market stability," Ghanem, the Libyan official, was quoted by Bloomberg News as saying Friday. "I expect a meeting before September. I am not calling for one, but I would support one."
Another OPEC delegate, quoted by Reuters on Friday, also raised the prospect of an OPEC consultation to increase production before the September meeting.
But there is no suggestion that the cartel will meet soon. On Thursday, the organization's secretary-general, Abdalla Salem El-Badri, issued a statement from the group's headquarters in Vienna, saying there was "clearly no shortage" of oil in the market. "In recent month, oil prices have become increasingly volatile, mainly driven by financial market developments and the increased flow of speculative funds into oil futures," the statement said.
But he seemed to leave the door for OPEC. "The organization stands ready to act if the market shows a need for any further measures," he said.