OPEC Must Increase Output to Reduce Prices, CGES Says

(Bloomberg) — OPEC needs to raise oil production to reduce crude prices and help global economic growth, the Centre for Global Energy Studies said.

OPEC’s forecast for 2008 supply increases from outside the group is unrealistic, the London-based consultant said in a monthly report today. World oil inventories fell for six consecutive quarters before rising in the second quarter of 2008, indicating a supply shortfall, the report said.


“OPEC’s continued assertion that the world is well supplied with oil does not stand up to scrutiny,” the report said. “Not enough oil is being produced to meet world demand and this has been the case since the middle of 2006.”.

OPEC’s prediction that non-OPEC production will increase by 560,000 barrels a day in 2008 compared with last year is a “gross over-estimation,” CGES said. Non-OPEC production was down around 330,000 barrels a day in the first half, according to the report.

The Organization of Petroleum Exporting Countries, supplier of 40 percent of the world’s oil, must increase output to prevent record prices harming the world economy, the report said.

Bloomberg