Opec decision to boost oil output gets lukewarm response

Saudi Arabian Oil Minister Ali I Naimi pushed Opec for an increase in oil output Keystone

The decision by the world's leading oil producers to increase output by 800,000 barrels a day may not be enough to bring prices down, according to Switzerland's Oil Association.

Oil prices have surged to 10-year highs in recent weeks to around $35 dollars a barrel, raising fears of a global economic slowdown. There are also concerns that low fuel stocks could trigger shortages as the northern hemisphere moves into winter.

Opec oil ministers meeting in Vienna on Sunday said they wanted to see prices fall to within $22 to $28 per barrel. But most analysts agree that the agreed boost in output will do little to bring prices down.

“A considerable increase would have been around two million barrels a day,” said Rolf Hartl, the head of the Swiss Oil Association. “Sunday’s decision will not affect prices to a significant degree.”

Analysts also point out that it will take as long as seven weeks for the increase in production to trickle through to the market.

The announcement is being seen as a step in the right direction, though, and as a sign that some Opec members, particularly Saudi Arabia, are determined to push oil prices down.

“We welcome the decision because the high price of oil is of great concern for the Swiss economy,” said Peter Hutzli of the Swiss Federation of Commerce and Industry.

The soaring price of petrol especially has angered consumers in Western countries and led to bitter protests in France.

Rolf Hartl told swissinfo that he expects Opec to heed further western calls to increase output for a fourth time this year.

“During the next two months, Opec will look at market reaction. Western pressure will continue because prices will not fall significantly and I expect Opec to increase production further but not before November.”

by Michael Hollingdale