BUSINESS: OPEC Raises Oil Supply But Can Not Lower Prices, page 1

OPEC appears powerless to have any effect on the current rising oil prices. Despite their decision to raise oil production by 2 million barrels a day (m b/d) in July, and an increase of 500,000 b/d in August, the price has remained relatively flat. Oil is still at the $40 a barrel price that was unheard of before this year. The problem is that OPEC has little spare capacity, and most of that is in Saudi Arabia. Saudi Arabia has been in the news several times recently after attacks were made on oil companies there.

business.iafrica.com - OPEC powerless to rein in prices
OPEC oil producers, already pumping near to full capacity, appear powerless to calm markets nervous about rampant demand and the risk of terrorist disruption to supplies, analysts say.

Oil prices have surged in the wake of a weekend attack by suspected al-Qaeda militants on oil workers in Saudi Arabia which stoked fears that terrorists could disrupt supplies from the world's biggest exporter.

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Once OPEC implements this latest surge in oil production, their spare capacity will be fully used. This means that if anything disrupts the production there would be no way to make up the supply from other sources. Even if no shortage occurs, China's growing demand will eventually create a larger demand. The U.S. continues to fill it's strategic reserves, and the EU is calling for it's own similar reserve. Don't expect prices to fall anytime soon.

[Edited on 3-6-2004 by dbates]