Oil's record rally stalled on Wednesday after an Opec minister said the group could not rule out another output hike and may call an early formal meeting next month in Saudi Arabia. US crude settled down 21 cents at $87.40 a barrel - its first loss in seven sessions - after touching a fresh record $89 earlier in the day. London Brent crude fell 42 cents to $83.13 a barrel.
Oil prices have climbed more than 10 percent since last week on fears of a winter supply crunch, a weakening dollar, and rising tensions between Turkey and Kurdish rebels in Iraq. Nigeria's oil minister told Reuters Wednesday that the Organisation of Petroleum Exporting Countries could call a formal meeting November 17 when ministers meet in Saudi Arabia for a heads of state conference, nearly three weeks earlier than planned. He added he could not rule out a production hike.
"There will be a meeting of ministers, initially informally, but there may be a formal meeting," Minister Odein Ajumogobia said. "We are still a month away and it depends what transpires before then." Opec's next scheduled formal meeting is scheduled for December 5 in the United Arab Emirates. The group already has agreed to boost output by 500,000 barrels per day starting November 1. US Energy Secretary Sam Bodman said Wednesday that high oil prices were of "great concern" to the administration of President George W. Bush.
The United States' economy is already facing headwinds from the meltdown in the subprime mortgage market, and experts said soaring energy costs could worsen the economic outlook. "Given the long-term risks of security-related disruptions to the global oil market, it would be very wrong to write off oil-induced recessions as a thing of the past," said Gilles Moec, an economist at Bank of America.
Oil's rally earlier in the day to $89 a barrel was propelled by news Turkey's parliament granted its troops permission to launch an attack against Kurdish rebels inside Iraqi territory, despite international pressure. The tensions dimmed hopes for a recovery in Iraqi oil exports via Turkey, which have been sporadic since 2003. But traders say the greater fear is the risk of further unsettling the Middle East region, source of a third of the world's oil.
Surging oil prices, also driven by an inflow of investor money, have approached their $90.46-per-barrel inflation-adjusted peak of 1980, the year after the Iranian revolution and at the start of the Iran-Iraq war.
US petroleum consumption already has showed signs of slowing, with demand growth running just 0.2 percent over last year, according to the latest government data. But experts said the slowdown was being offset by continued strong growth in demand from China and other developing economies. Further tempering oil's rally on Wednesday, US crude stocks and refined fuel stockpiles rose more than expected last week, according to a government report.
But inventories of crude in the United States remain about 4 percent below last year, while gasoline and distillate stocks remain about 7 percent below last year.