BEIRUT, Lebanon -- Several OPEC members expressed support Wednesday for a Saudi plan to raise the group's oil production ceiling by 10.6 percent in the hope of calming jittery markets and reducing crude prices from near record heights. Oil prices sank more than 5 percent in trading in New York and London.
A more radical proposal by Algeria for the Organization of Petroleum Exporting Countries to suspend its output ceiling altogether appeared to win no immediate backing.
OPEC representatives arriving in Beirut expressed a common desire to send a strong signal to oil markets that the group would boost production and ensure that crude supplies remained plentiful. They gathered for joint talks ahead of a formal meeting Thursday on OPEC's production policy.
A suspected al-Qaida terror attack on oil worker compounds in Saudi Arabia over the weekend stunned markets that were already nervous about stretched oil inventories, Middle East tensions and a possible shortfall in supply. U.S. crude prices shot up to record levels in response but retreated somewhat Wednesday as Saudi Arabian Oil Minister Ali Naimi stressed that Saudi Arabia was taking adequate security measures at its strategic facilities for collecting and exporting oil.
"I assure you that the kingdom and all OPEC members are concerned ... and we don't want high prices," he said in a speech at the Beirut offices of the U.N. Economic and Social Commission for Western Asia.
U.S. light crude oil for July delivery fell $2.37 to settle at $39.96 per barrel, a day after settling at $42.33 - the highest settlement price in the contract's 21-year history on the New York Mercantile Exchange. In London, July contracts of Brent crude settled at $36.86, down $2.22 from Tuesday's closing price.
Under pressure from the United States and other major oil importers, Saudi Arabia has already boosted its output by 600,000 barrels a day, independently of OPEC. The United Arab Emirates showed a willingness to add more barrels of its own.
"In order to calm the heat of prices, the United Arab Emirates has taken a decision to increase production by over 400,000 barrels a day," the country's oil minister, Obaid bin Saif al-Nasseri, said upon arrival at Beirut airport. For the most part, such an increase would represent a return to a normal level of production for the United Arab Emirates after a lull in output due to maintenance at its oil facilities in April.
Kuwaiti Oil Minister Sheik Ahmed Fahd Al Ahmed Al Sabah said Kuwait would increase its output by 100,000 barrels later this month.
Algeria's Oil Minister Chakib Khelil suggested that OPEC members temporarily "do away" with all their individual production quotas, though he shook his head when asked if such a suspension would cause prices to fall.
"I don't think we will suspend the quotas," responded Kuwait's Sheik Ahmed. "I'm not a supporter of that idea, but we still support the idea of increasing to 26" million barrels.
Like Kuwait, Qatar and Nigeria also backed the Saudi plan to raise OPEC's production ceiling to 26 million barrels - an increase of 2.5 million barrels.
OPEC produces more than a third of the world's crude. Saudi Arabia, with the world's largest proven oil reserves, is the group's most powerful member. For this reason, the weekend attack that killed 22 people at the Saudi oil hub of Khobar sent a tremor through the market, and the Saudis have sought to persuade buyers that they are doing all they can to prevent an even more damaging attack.
"They've proven that they can't protect the people at the core of that industry - at least the foreign element," said Jan Stuart, an analyst at the New York brokerage Fimat. Saudi Arabia employs as many as 30,000 foreigners in its oil industry, and Stuart argued that the Saudi industry's flexibility and efficiency would suffer in coming years if many of these expatriates left the kingdom out of concerns for their safety.
Naimi insisted that his country could continue producing oil without the help of foreigners.
"There are those who believe that if five or 10 foreigners leave, production in the kingdom will stop. And this is all a wrong way of thinking. ... We have refineries that are run by Saudis," he said in his speech.
Naimi blamed media commentators for fanning fears that terrorists could launch a devastating strike against vital Saudi installations, which he said were under "intensive protection."
He also argued that heavy speculative trading on futures markets has helped to divorce current high prices from the reality of physical supply and demand.
"Contrary to what some believe, OPEC cannot always control prices. OPEC's role is limited to working to achieve a balance between supply and demand in the crude oil market. But the prices are controlled by the market and are affected by many factors," he said.
Many analysts agreed that OPEC's options for reassuring the market were limited.
Although Saudi Arabia has boosted its own output independently of OPEC, many of the group's members are already producing at close to their capacity. OPEC is pumping 2.3 million barrels above its current ceiling, according to the group's president, Purnomo Yusgiantoro, and an increase in its ceiling would legitimize this overproduction rather than add a lot of new oil to the market.