The Organisation of Petroleum Exporting Countries (Opec) is preparing to increase production by up to one million barrels per day in an effort to stabilise oil prices.
Representatives of the oil cartel will meet in Vienna on September 19th to discuss the prospects for a rise in production levels, which comes as oil prices hover near record highs.
"Opec members will most probably raise the organisation's oil production ceiling in a bid to stabilise oil markets," Iran's Opec governor Hossein Kazempour Ardebili said yesterday on his department's website.
The likelihood of an increase in oil production comes as concerns grow over the potential negative effect of fuel costs on growth of the world economy.
Minister for Finance, Brian Cowen, is expected to warn in a speech to the Fianna Fáil party that high oil prices will pose challenges for the Irish economy in coming months. "We are in a fairly good economic position but to maintain that we have to adopt prudent policies, particularly in light of challenges posed by higher oil prices," a spokesman for the Ministry for Finance said.
However, the spokesman said Ireland was in a better position than many of its competitors to withstand the high price of oil.
He could not comment on reports that Mr Cowen would revise forecasts for economic growth given the high price of oil.
The Government raised its forecast for 2005 gross national product growth to 5 per cent in its annual Economic Review and Outlook in August. It left its estimate for gross domestic product unchanged at 5.1 per cent because of weak trade numbers. The next official economic forecast from the Government is expected with the budget in December, the spokesman said.
Meanwhile, NYMEX crude prices for October delivery settled at $67.57 a barrel on Friday, after topping record levels above $70 last week. due to concerns over a lack of refining capacity in the US. They were driven even higher when Hurricane Katrina cut a further two million barrels of US refining capacity last week.
Opec's decision to target production increases when it meets in Vienna later this month have been expected as the price of oil has soared on world markets.
Opec president Sheikh Ahmad al-Fahd al-Sabah has said he will propose a 500,000 barrels per day rise at the September meeting. Saudi Arabia has said it is willing to pump an extra 1.5 million barrels per day of crude, although there appears little appetite for this at the moment. - (Additional reporting by Reuters)
