NEW YORK — Oil Prices retreated Tuesday as OPEC ministers discussed whether to ramp up oil production in the wake of the Libyan uprising.
U.S. crude oil futures settled at $105.02 a barrel in trading on the New York Mercantile Exchange, down 42 cents. In London, Brent crude dropped $2.79 to $112.25 per barrel on the ICE Futures exchange.
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"We are in consultations about a potential output increase but have not yet decided," Kuwait Oil Minister Sheikh Ahmad al-Abdullah Al-Sabah told reporters Tuesday.
The Libyan crisis has forced companies to evacuate workers, and most of the country's 1.6 million barrels of daily production has been shut down. Boosting production elsewhere would likely cool off overheated energy prices, but experts warn that doing so would weaken OPEC's ability to manage global supplies later this year.
Michael Lynch, president of Strategic Energy & Economic Research, said it also won't address the basic fear that has been pushing oil prices higher for the past few weeks.
The main concern isn't whether the cartel can replace Lybia's daily exports. It's whether the governments of Saudi Arabia and Iran and will change in the wave of pro-reform uprisings that already have ousted leaders in Egypt and Tunisia. Raising production now "would have a minor calming effect on the market," Lynch said. "Other than that, it's not going to take us back below $100" per barrel.
Many OPEC producers are skeptical that raising output would help the oil markets, saying world supply is comfortable despite the loss of Libyan crude.Story: Yes, the world still has plenty of oil, but ...
The fighting in Libya has shut down about two thirds of the oil output in Africa's third-largest producer. The OPEC member normally pumps 1.6 million barrels per day, or about 2 percent of world output.
While OPEC has not changed its formal policy for more than two years, it has been boosting actual supply for months. Saudi Arabia said Tuesday the world had sufficient oil and it held enough in reserve.
"The kingdom has 3.5 million barrels a day of spare capacity which could help compensate for any shortages," Saudi oil minister Ali al-Naimi said in remarks carried by Saudi state news agency SPA.
The Associated Press and Reuters contributed to this report.