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OPEC leaders discuss raising oil production

BEIRUT, Lebanon - OPEC met today to discuss boosting production to bring down the uncomfortably high prices for crude oil, with the Saudi oil minister saying he expects the cartel to endorse his proposal to lift its output ceiling by 11 percent.

Saudi Arabia, the most influential member of the Organization of Petroleum Exporting Countries, has proposed raising the ceiling to 26 million barrels a day - an increase of 2.5 million barrels. Fellow OPEC members Kuwait, Qatar and Nigeria have backed the Saudi plan.

"There won't be opposition at the conference to this," as 26 million barrels is the group's actual daily production this year, Saudi Oil Minister Ali Naimi said in an interview with today's edition of the pan-Arab newspaper Al Hayat.

Earlier signals from OPEC that it would raise both the ceiling and its actual output had the desired effect of lowering record-high prices. Oil prices plunged 6 percent Wednesday after the United Arab Emirates and Kuwait pledged to join Saudi Arabia in adding fresh barrels to global supplies.

Prices rebounded somewhat early today as traders questioned OPEC's ability to pump enough oil to calm market fears of terrorists disrupting supplies. In London, contracts of Brent crude for July delivery were trading 36 cents higher at $37.22 a barrel.

July contracts of U.S. light crude were up 41 cents at $40.37 in New York. This was still well short of U.S. crude's record finish Tuesday, which followed a terrorist attack in the Saudi oil hub of Khobar that killed 22 people, mostly foreign oil workers. The attack - blamed on al-Qaida - stunned markets, which were already nervous about stretched oil inventories and Middle East tensions.

Saudi Oil Minister Ali Naimi stressed that the kingdom was taking adequate security measures and restated his goal of pushing down prices.

"I assure you that the kingdom and all OPEC members are concerned ... and we don't want high prices," he said.

OPEC representatives in Beirut expressed a common desire to lift their production ceiling.

"Anything less than 2.5 million barrels will be a disappointment to the market. Therefore, it will not cause the price to drop," said Falah Aljibury, an energy consultant based in Alamo, California.

One OPEC source said Iran objected to such a large increase and preferred to lift the ceiling in at least two stages. If prices fell after a smaller increase of, say, 1.5 million barrels, then OPEC could forego an additional increase of 1 million barrels, the source said, speaking on condition of anonymity.

However, the need for OPEC to signal that it would add barrels of fresh oil to the market was even more important than a higher production ceiling, Aljibury said.

Under pressure from the United States and other major importers, Saudi Arabia has already boosted its actual output by 600,000 barrels a day, independently of OPEC.

The United Arab Emirates' oil minister announced his country would raise production by more than 400,000 barrels per day. As he arrived in Beirut, Obaid bin Saif al-Nasseri said the hike aimed "to calm the heat of prices."

Kuwaiti Oil Minister Sheik Ahmed Fahd Al Ahmed Al Sabah said his country would increase its output by 100,000 barrels later this month.

Together, the three Gulf states are expected to add more than 1 million barrels to global supplies.

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