Opec rules out production increase

4 February 2008

Energy ministers from the Opec nations have rejected calls from the US to increase crude oil production.

George Bush last month appealed to Saudi Arabia's King Abdullah to raise output in order to help cut the price of oil, which the US president believes is having a negative impact on the global economy.

However, at a meeting in Vienna on Friday the Opec nations decided that current production levels are sufficient, citing the anticipated economic slowdown as the reason for the decision.

Opec's next meeting will take place on March 5th and if a recession in the US still looks likely, the possibility of cutting production will be on the agenda, according to Mike Wittner of Societe Generale.

He told Reuters: "I absolutely expect them to consider cutting output in March. To me, the only question is, will it be a formal cut or ... just cut informally?"

Meanwhile, concerns about the state of the US economy saw the price of heating oil futures fall by 3.17 per cent to $2.4489 (€1.65) a gallon on Friday. Brent crude lost $2.77 to close at $89.44 a barrel and US crude slipped $2.79 to settle at $88.96.