updated 8/23/2004 1:22:42 PM ET 2004-08-23T17:22:42

OPEC may be unwilling to take the final step aimed at trying to deflate record high oil prices by formally suspending production limits, cartel delegates said on Monday. Separately, Russian President Vladimir Putin told President Bush Monday that Russian oil companies were boosting production.

“President Putin noted Russian oil companies are increasing production and exports and will continue to do so,” White House spokesman Scott McClellan told reporters at the president’s Texas ranch.

While all OPEC producers bar Saudi Arabia are pumping flat out, a situation unlikely to change until runaway oil prices are brought under control, an official cartel free-for-all has yet to gain currency within the 11-member exporters’ group that meets on September 15.

“Unofficially the quotas effectively have been suspended, and most likely they will continue to be suspended until prices come down,” said an OPEC delegate. “So why create a dispute by turning this into a formal agreement?”

A call by Western-friendly OPEC powers for the cartel to abandon output restraints during the U.S.-led war on Iraq last year was rejected by Iran, who said the proposal implied support for a U.S. attack on Iraq.

The political implications of a formal quota suspension could once again dissuade some in the Organization of the Petroleum Exporting Countries from explicit endorsement.

“There has been no such talk at all about suspending the ceiling,” said Iran’s OPEC governor Hossein Kazempour Ardebili.

The idea has, however, made the rounds with oil dealers who might see a free-for-all as a tempting opportunity to sell crude.

With oil prices trading at fresh highs over the past couple weeks, there is every incentive for OPEC to produce as much as it can.

The cartel is churning out some 30 million barrels per day (bpd), putting its 10 members bound by quotas two million bpd above a formal ceiling of 26 million and leaving all but Saudi Arabia stretched to the limit.

Western oil executives see Riyadh cranking up towards 10 million next month, leaving it about 500,000 bpd to spare.

Some in OPEC are reluctant to see the kingdom gaining market share by formally allowing members to pump at will.

For that reason, some delegates are ruling out the possibility of the cartel legitimising current production rates at its September 15 meeting.

Instead they see potential for an official increase of one to two million barrels per day on top of OPEC’s existing 26-million-bpd production ceiling that would recognise existing leakage.

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