VIENNA: Gulf OPEC (Organization of the Petroleum Exporting Countries) will push for an increase in supplies at a meeting of the oil organization this week in an effort to support flagging world economic growth by bringing crude prices back below $100 a barrel. Data indicating that economic recovery may be stalling in the West is worrying OPEC's core Gulf members. Gulf producers will argue that oil prices are undermining the economic growth that fuels demand for OPEC crude and that more supply is needed to balance demand in the second half of the year. "We need to increase by at least one million barrels a day," a Gulf OPEC delegate told Reuters in Vienna Sunday. "We're not happy with current prices." "We want to meet growing demand in the second half of the year without flooding the market," said a delegate from another Gulf country. Global benchmark Brent crude was valued just below $116 a barrel Friday having risen from $90 a barrel when OPEC last met in December and decided to do nothing. Saudi Oil Minister Ali Al-Naimi, the first minister to arrive in Vienna for Wednesday's OPEC meeting, had no comment for waiting reporters. But his presence in the Austrian capital so early, along with delegates from fellow Gulf Arab nations, will permit an early exchange of views Monday among those countries that are normally most dovish on prices. They may face opposition from OPEC's leading price hawks, Iran and Venezuela, who argue high prices are justified and that, in any case, OPEC is powerless to prevent speculators controlling price direction. Iran's cause won't be helped by the fact that it has no oil minister and has yet to decide who will represent OPEC's second biggest producer at the meeting. An OPEC advisory group of economists agreed Friday that demand for OPEC oil in the second half of the year warranted an increase in supply. Anything less than a million-barrel-a-day increase may be regarded by the oil markets as a token gesture. OPEC pumped 29 million bpd in April. According to its latest monthly report from OPEC headquarters in Vienna, demand for its crude will rise to 30.66 million bpd in the second half of the year on the 89-million-bpd world market. That would suggest OPEC needs to raise output by 1.7 million bpd from current production to balance global supply and demand. The International Energy Agency has already called on OPEC to increase output and prevent another damaging spike in prices, with seasonal demand set to strengthen in the coming summer months in the northern hemisphere. So far this year, Brent oil prices have soared by about 21 percent, largely as a result of spreading unrest in the crude-producing Middle East and North Africa region - and particularly in OPEC member Libya. At the same time, recent downbeat global economic data has suggested that the economic recovery is struggling and this complicates the outlook. "I would expect OPEC to leave quotas unchanged, rather than raise them, given the growing evidence that global demand is slowing," said Capital Economics analyst Julian Jessop. "There is speculation in the market that they will be doing something to acknowledge the supply problems in Libya. "Regardless of what OPEC happens to do ... prices have further to fall," he added, citing recent weak economic data in top oil consumer the United States. Standard Chartered analyst Helen Henton said "comments from OPEC members to date suggest that OPEC will ... pledge to keep the market well supplied, rather than proposing any formal change in output targets." OPEC has left its production target at 24.84 million barrels per day (mbpd) since early 2009. The IEA estimates that output stood at 26.15 mbpd in April. IHS Global Insight oil analyst Simon Wardell agreed that OPEC members were already pumping above the official ceiling to compensate for the Libyan shortfall. "We expect no change in OPEC quotas once again. Certainly, oil consuming nations would welcome an increase but increasingly, OPEC is responding to market signals outside of the formal quota system," he said.
