IEA says OPEC output rise would have lowered oil price

By Muriel Boselli

PARIS (Reuters) - The International Energy Agency (IEA), which advises industrialised countries on energy policy, said on Wednesday record crude oil prices would have eased had OPEC decided to raise production at its meeting.

OPEC ministers agreed earlier at a meeting in Vienna to hold output steady and said oil prices, which hit all-time highs on Wednesday, were being driven by factors beyond their control.

"I think it's basic economics, if you increase the amount of supply that is available, prices fall ... It would have had an impact, " said Lawrence Eagles, head of the IEA's Oil Industry and Markets division.

"We are seeing the market signalling a desire for more flexibility," he added.

U.S crude futures CLc1 struck an all-time high of $104.56 earlier on Wednesday.

OPEC ministers argued the oil market was pushed higher by a weak dollar, speculation and political strife, and not by a lack of crude.

But Eagles warned that a tight crude market could lead to possible market distortion.

"If people are not confident they will have oil supplies when they are needed, then they'll have a tendency to hoard, so regardless of your stock level, those stocks might not be available to the market," he said.