Experts split over cause of oil crisis

LONDON — Analysts split Monday over causes for the West European oil crisis. Some said it stems from a political divide within OPEC while others said burgeoning demand has outstripped production capacity.

OPEC has agreed to a three percent increase in oil production under pressure from Saudi Arabia. Iran and Libyan pressed for a much smaller increase and industry analysts said OPEC simply cannot keep up with the increase in demand.

OPEC oil ministers meeting in Vienna said the decision to raise oil production output by 800,000 barrels per day represents a three percent increase in oil production. The new OPEC ceiling for its 10 members is now 26.2 million barrels a day. This does not include Iraq, which is under United Nations sanctions.

The increase was about half that demanded by Saudi Arabia. OPEC ministers said Riyad was pressing for an increase between 1 and 1.5 million barrels per day. Iran and Libya wanted a much smaller increase, Middle East Newsline reported.

"OPEC cares very much about stability in the oil market with fair and reasonable prices for consumers and is trying very hard to bring this about," said OPEC President Ali Rodriguez, Venezuela's oil minister.

This was the third time this year that the cartel announced oil production increases. Ministers said the cartel would meet again on Nov. 12.

Oil analysts said they did not know whether the OPEC decision would reduce oil prices from its current level of about $34 a barrel. The analysts said the decrease in prices was dependent on whether the cartel could meet rising demand ahead of the winter.

On Monday, several ministers from OPEC arrived in Paris to brief French leaders of the cartel's decision.

Currently, the OPEC production ceiling is 25.4 million barrels a day. Officials said Saudi Arabia wants to bring the price of oil to $25 a barrel and has already pumped an additional 600,000 barrels a day since July.

The Saudi proposal has other detractors. Kuwait said it wants to approve a hike of no more than 655,000 barrels a day.

The Saudi lead came as oil prices broke the $35 a barrel barrier. On Friday, the price of oil dropped to $33.60.

Industry analysts said OPEC can simply not keep up with rising oil demand. Shortages have been reported in the United States and throughout Europe.