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Published: June 14, 2005

VIENNA, June 13 – OPEC representatives arriving for a meeting here this week said that they were prepared to lift their oil production ceiling in an effort to bring down high crude oil prices, but emphasized that strong global demand for oil limited their ability to influence markets.

“OPEC members are already pumping at full capacity and can do nothing about prices,” Bijan Zanganeh, the oil minister of Iran, OPEC’s second-largest producer behind Saudi Arabia, said in Tehran before traveling to Vienna.

Ali al-Naimi, the oil minister of Saudi Arabia, the most pivotal member of the Organization of the Petroleum Exporting Countries, said he supported raising the group’s output ceiling by 500,000 barrels a day, but suggested that refining bottlenecks in rich industrialized nations would prevent such an increase from having much effect on prices.

The group, which produces 40 percent of the world’s oil, still appears to be somewhat stymied by the resilient demand for oil in major markets like China and the United States, even if member countries have been delighted about the financial windfall created by high oil prices.

Production quotas for OPEC’s 11 members, excluding Iraq, stand at 27.5 million barrels a day. The International Energy Agency, however, estimates that those 10 OPEC nations actually produced 27.51 million barrels a day in May as they rushed to exploit strong demand.

Katherine Spector, an energy strategist for J. P. Morgan in New York, said that while some OPEC members were publicly calling for more production, such statements were “mostly semantic” because, in effect, OPEC members have recently been giving a smaller discount for the oil they sell in international markets in relation to commonly quoted prices.

OPEC’s enhanced bargaining power is yet another illustration of the growing global demand for oil. Demand is expected to reach 86.4 million barrels a day in the fourth quarter, the International Energy Agency said this month, translating into 1.78 million barrels a day more than last year, or a 2.2 percent increase.

World oil demand rose 3.4 percent in 2004, its fastest pace in a quarter- century, as the economies of China and the United States required more oil for their factories and automobiles. China alone accounted for about 40 percent of new oil demand from 2001 to 2004, and is planning to build a strategic petroleum reserve similar to the reserves in the United States and some European countries, a move that could put additional pressure on oil prices this year.

Oil prices rose sharply ahead of OPEC’s meeting, which is scheduled for Wednesday at OPEC’s headquarters here. Crude oil for July delivery climbed $2.08, or nearly 4 percent, to $55.62, on the New York Mercantile Exchange yesterday on concern about refining capacity. Oil prices have been volatile since rising above $57 a barrel in early April before pulling back somewhat.

Some OPEC representatives remain worried that high oil prices could encourage consumers in rich countries to start switching to other fuels as energy efficiency becomes a bigger concern. There is little evidence, however, to suggest that such a large-scale transition might be under way.

In fact, major international oil companies are factoring in estimates for relatively high oil prices into the foreseeable future. Senior executives at two companies, Royal Dutch/Shell and BP, recently said they expected oil prices to remain at or around $40 a barrel for at least the next several years.

Forecasters at Shell went even further this month, discussing the possibility of governments of oil-rich countries becoming more aggressive over the next two decades in their dealings with private companies.

The pursuit of such policies by the governments of countries in OPEC and elsewhere might seem reminiscent of the 1970’s, when the United States, Europe and Japan were shaken by embargoes and the nationalization of private oil company assets in several producing countries. But in a major difference with those oil shocks, oil price increases over the last two years have not been driven by the restriction of supply but by an unforeseen and steady climb in demand.

OPEC could add about 700,000 to 800,000 barrels of daily production capacity among its members by the end of the year, according to the International Energy Agency. But it remains to be seen whether the availability of that oil will have an effect on prices, given the tight refining capacity for certain blends of oil and forecasts of rising demand.

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