World oil prices shot up by more than a dollar-and-a-half to $41.50 per barrel on Tuesday, following terror strikes and fears of political instability in Saudi Arabia and the possible disruption of supplies.
The terror attack by suspected Al Qaeda militants killed 22 persons on Saturday at Khobar in Saudi Arabia, the world's biggest oil exporter.
Oil prices are now perilously close to their highest ever of $41.85 per barrel touched on May 17.
Despite the promise made by Saudi Arabia and other oil-producing nations to increase production in a bid to curb the price increase, global markets remained jittery.
The price of benchmark Brent North Sea crude oil for delivery in July jumped by $1.25 to $37.85 dollars in the first few minutes of trading.
New York's reference light sweet crude for July delivery climbed by $1.03 to $40.91 in out-of-hours electronic dealing.
Saudi Oil Minister Ali Naimi said Tuesday that OPEC will do 'its best' to ensure that crude supplies are adequate to meet global demand, as prices surged in early trading on oil markets in London and New York.
"OPEC will do its best to make the fundamentals right," Naimi told reporters on arriving at a Beirut hotel ahead of talks Thursday with his counterparts from the Organization of Petroleum Exporting Countries about a possible increase in oil production.
Saudi Arabia, the world's largest oil producer, has already raised its output to 9.1 million barrels a day, well above its 7.638 million barrel per day OPEC quota. The kingdom has proposed OPEC formally raise its 23.5 million barrel per day output ceiling to help bring prices down.
Meanwhile, Organisation of Petroleum Exporting Countries member Kuwait said that it was ready to accept an increase in OPEC's oil production ceiling to 26 million barrels per day.
Kuwait believes that $30 per barrel is a 'fair price' for oil, the emirate's Energy Minister Sheikh Ahmad Fahd al-Sabah said Tuesday, ahead of a crucial OPEC meeting.
"There are some thinking about this issue, but the matter is not on the agenda of the OPEC ministerial meeting, scheduled for June 3," he said.
"It could however be added to the agenda later."
Sheikh Ahmad said Kuwait would urge its partners in the Organisation for Petroleum Exporting Countries to increase output by between 1.5 and 2 million barrels per day (bpd) over current production.
"I spoke about 1.5 to two million barrels (a day) ... over the actual production. I think this is our request for OPEC," he said.
Current OPEC production, excluding Iraq, is estimated to hover around 26 million bpd, about a third of total world production.
Kuwait is currently producing "almost 2.4 million" bpd, some 500,000 bpd over its OPEC quota of 1.886 million bpd, said the minister, adding: "We are trying to reach 2.5 million barrels per day."
Sheikh Ahmad also said that OPEC was among various issues discussed with US ambassador to Kuwait, Richard Jones, when they met at the airport before his departure for Beirut.
"We spoke about many many things. . . (including) a request that OPEC should act positively for the stability of the oil market, and we can understand this request," the minister said.
Jones, who is also deputy US administrator in Iraq, praised Kuwait's OPEC policy as "constructive".
"I think we understand the Kuwaiti policy very well. I think it's a very constructive policy. We appreciate it," Jones said.
Analysts expect the 'terrorist premium' on oil prices to rise in coming weeks following the attack in Saudi Arabia.
Although oil facilities were not affected in the Khobar attack, analysts says the incident will heighten concern about supply security in the Middle East.
Oil prices are up about 25 percent since the end of 2003 on instability in the Middle East and higher than expected demand, particularly in the United States, China, India and other parts of Asia.
Additional inputs: AFP
