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. Last Updated: 07/27/2016

Pressure Builds for OPEC Output Rise




NEW YORK -- Oil prices spiked to their highest levels since the Gulf War again Tuesday and analysts doubted the cost of crude would ease much before mid-year, even if major producers relax yearlong curbs and increase output.


Crude oil for delivery in March rose to a fresh nine-year high of $30.45 a barrel in frenzied early trading on the New York Mercantile Exchange, or NYMEX, after breaking above the $30 level Monday. Prices eased slightly later but settled at $30.06, dipping 19 cents on the day.


"They can go about raising [production] quotas, but the seeds have already been sown for a very tight [second] quarter," said William Buff, president of consultancy W.H. Brown & Co. in New York.


Crude oil prices have tripled within the past year since the Organization of Petroleum Exporting Countries and its allies implemented production cuts.


From March 1999, a producers' agreement called for cutbacks of 4.3 million barrels per day. World oil consumption in 1999 was 75.3 million bpd.


The steady price surge that followed has raised inflation fears worldwide and caused the United States to urge OPEC to take steps to increase output.


Last week, U.S. President Bill Clinton took the unusual step of releasing $130 million in emergency funds to help low-income Americans in the Northeast pay their high heating oil bills.


On Tuesday, Clinton said he did not rule out any options on ways to deal with the sharp increase in prices, including the option of tapping the federal government's crude oil stockpile.


"I have not closed off any options. I'm monitoring this on a daily basis. It's a deeply troubling thing," Clinton told reporters.


Producers meanwhile have been keeping the market on edge with mixed signals about the likely outcome of a meeting scheduled for March 27 when they will discuss whether to extend their yearlong production curbs.


Earlier Tuesday, Mexico's energy minister, Luis Tellez, said his country was considering a production increase after consulting with other major producers, adding that current prices were unsustainable for the long term.


But Hugo Chavez, president of OPEC producer Venezuela, said he saw no reason to hike output now.


Traders said a flood of comments overnight also highlighted division among oil producers.


Kuwait's oil minister, Sheikhh Nasser Saud al-Sabah, said he saw a "full agreement" among the six-member Gulf Cooperation Council - Saudi Arabia, Oman, Qatar, United Arab Emirates, Bahrain and Kuwait - to extend the cuts when they meet later this month in Riyadh, the Saudi capital.


The most influential official in OPEC, Saudi Oil Minister Ali al-Naimi, said oil producers will decide next month to ease crude output restrictions or maintain them after March.


"The decision will be made in March," Naimi said as he arrived for an energy industry function in Tokyo.