OPEC Will Wait for $100 Oil Before Raising Output (Update2)

June 10 (Bloomberg) -- OPEC, the supplier of 40 percent of the world’s oil, will only consider increasing output when the price of crude rises to $100 a barrel, according to Kuwaiti Oil Minister Sheikh Ahmed al-Abdullah al-Sabah.

The Organization of Petroleum Exporting Countries, due to meet again in September, wouldn’t raise production with oil at $75, “but if it reaches $100, maybe,” Sheikh Ahmed told reporters in Kuwait today.

Crude oil traded in New York has climbed almost 60 percent this year, after plunging more than $100 in five months at the end of 2008 as the global recession curbed demand for fuel.

Oil prices have increased because investors have bought crude as a hedge against a weakening U.S. dollar, not because demand is rising, Sheikh Ahmed said.

“The numbers, in terms of economic recovery, are not with the rise of oil,” he said. OPEC is seeing signs of an increase in demand for oil in Asia, Sheikh Ahmed said, “but overall we don’t see any rise in demand. That’s why we should be cautious not to be driven by the market.”

OPEC predicted stronger demand as it decided May 28 in Vienna to keep production quotas unchanged. OPEC agreed at three meetings last year that the 11 members with production quotas would reduce output by 4.2 million barrels a day.

Oil futures rose above $71 a barrel yesterday for the first time in seven months, and traded at $71.18 as of 9:14 a.m. on the New York Mercantile Exchange.

Refinery Project

Sheikh Ahmed also said a project, frozen in March, to build Kuwait’s fourth oil refinery is “still the same until it’s discussed by the government.”

Kuwait in May last year awarded contracts to build a refinery in Al-Zour to Japan’s JGC Corp., South Korea’s GS Engineering & Construction Corp., SK Engineering & Construction Co., Daelim Industrial Co. and Hyundai Engineering & Construction Co.Fluor Corp., based in Irving, Texas, was awarded a consulting contract. The 615,000 barrel-a-day refinery was expected to come on stream by 2012. Kuwait said it canceled letters of intent with the chosen companies.

“I’m sure this is a major project, it has to be discussed sooner or later,” Sheikh Ahmed said of Al-Zour.

Kuwait said Dec. 28 it scrapped a deal with Dow Chemical Co. to create K-Dow Petrochemicals. K-Dow is a “dead“ issue, Sheikh Ahmed said today.

Kuwait’s Petrochemical Industries Co. was to pay $7.5 billion for a 50 percent stake in Dow’s basic-plastics unit, the world’s largest producer of polyethylene. The resulting joint venture, known as K-Dow Petrochemicals, would have paid each partner $1.5 billion, boosting Dow’s proceeds to $9 billion.