OPEC oil producers are consulting about a supply boost but many in the group remain skeptical, saying high prices are due to fears of shortage and world supply is comfortable despite the loss of Libyan crude.
"We are in consultations about a potential output increase, but have not yet decided," Kuwait's Oil Minister Sheikh Ahmad al-Abdullah Al-Sabah told reporters on Tuesday.
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OPEC oil ministers have said there was no plan to meet ahead of the group's next scheduled gathering in June. Iran holds the OPEC presidency, a coordinating role rotated annually.
Its OPEC governor Mohammad Ali Khatibi downplayed speculation of more OPEC oil."There is no shortage in the market," he told Reuters. "There is no need for further OPEC supply."
"But the consumers are worried, this is psychological."
Khatabi said he had heard OPEC members were engaging in consultations, but there was "no concrete decision for an OPEC emergency meeting.
Brent oil prices fell by more than $2 after the Kuwaiti minister's comments about a potential output boost, but by 1113 GMT was only 8 cents down at $114.96 a barrel.
On February 24 Brent hit $119.79, its highest since 2008, when it reached an all-time high of $147.50.
SAUDI ALREADY INCREASED
Kuwait has not boosted supplies, Al-Sabah said, but added that Saudi Arabia was likely in the process of boosting production in response to the Libyan situation.
Senior sources in Saudi Arabia, the world's largest crude exporter, told Reuters last week that the kingdom has already increased production and was pumping around 9 million barrels per day.Saudi holds the bulk of OPEC's spare output capacity which can be tapped swiftly. The market looks to the kingdom, sitting on a spare capacity of around 3.5 million barrels per day, to make up for any shortage of oil.
Fellow-member Nigeria would increase its crude oil production if OPEC requested higher output to cool soaring oil prices, state oil company NNPC said on Tuesday.
Nigeria's light, sweet crude oil is similar to the type of oil produced by Libya and would be a good replacement for European refiners.
"We will do whatever OPEC asks its members to do. Whatever is needed under OPEC directives," NNPC spokesman Levi Ajuonoma said.
Algerian oil minister Yousef Yousfi told Reuters Insider late on Monday that a recent surge in oil prices was likely a short-term phenomenon.
OPEC has not changed its output quotas for over two years, since cutting production by a record 4.2 million barrels a day in late 2008 to combat plunging oil prices amid a global economic slowdown.But its output has crept higher over its formal output limits.
It has on a previous occasion in 2001 adjusted output after telephone consultations between ministers and without a meeting.