VIENNA (AFP) - OPEC will mull raising its oil output quota by up to one million barrels per day at a meeting in a largely symbolic gesture as members are already pumping far above the 26 million ceiling.
The 11-stong cartel is also expected to discuss raising a price band of 22 to 28 dollars per barrel to bring it closer in line with market reality, which has ranged between 40 and 45 dollars.
But ministers appear divided over whether a change in the band, which has been in place since March 2000, is needed immediately and will likely postpone a decision.
Market watchers are waiting to hear what action, if any, the Organisation of Petroleum Exporting Countries will take at the Vienna gathering -- the latest installment in an oil drama that has seen prices hit record highs due to terror fears and surging demand in China.
OPEC kingpin Saudi Arabia set the scene for a possible rise in the cartel`s oil quota from 26 million barrels per day (bpd) by saying that it was in favour of increasing the ceiling by one million barrels.
Several other countries including Kuwait have made a similar proposal.
"The recommendation is to increase the ceiling (by) about one million," said Kuwait`s oil minister, Al Ahmad al-Sabah, as he headed into an informal breakfast before the start of the conference.
"This is the recommendation of some members of OPEC," he told reporters.
In contrast, Iran has said the oil market was over-supplied by three million barrels daily, casting doubt on the need to raise the official production quota -- seen as a goodwill gesture to consumers as actual output is already at some 28 million barrels daily.
Venezuela, Libya, Qatar and Nigeria have also argued against an adjustment.
"It is very difficult... raising the ceiling may affect the price too much," Libyan Oil Minister Fathi Hamed Ben Shatwan warned.
Analysts have pointed out that any hike would have slim impact in real terms as the cartel is already pumping above its official quota, noting that they may have to curb actual production in the coming months by as much as one million barrels daily due to cooling demand.
"I think that the easiest thing for OPEC to do is nothing," said Adam Siemenski, a global oil analyst at Deutsche Bank in London.
The bank`s forecast for the fourth quarter and for most of next year is that demand for the 10 members of OPEC that have the quotas would be around 27 million barrels per day, he told AFP, on the sidelines of the OPEC gathering.
"So they might actually have to cut back just a little bit, maybe a million barrels a day, this is what the supply and demand fundamentals say," he said.
Faced with record prices, the cartel in June decided to increase its output by one million bpd over the next two months, and sources say it went well beyond that to pump 29.75 million bpd by the end of August.
Saudi Arabia has emphasised that what matters to the market is the real amount being produced by the cartel`s 10 members tied to the quota, Iraq being excluded, rather than the official output roof.
At the same time, Saudi Oil Minister Ali al-Nuaimi has said that oil prices were being driven by fear more than fundamentals and there was little more that OPEC could do to reduce them.
Underscoring how the fear factor has pushed up prices, oil rose on Tuesday after saboteurs again attacked Iraq`s vulnerable oil installations and concern mounted over the damage inflicted by Hurricane Ivan.