As OPEC heads of state began arriving in Caracas on September 26th to attend the second-ever summit of the group’s top leaders, their representatives were already defending OPEC’s production policies and warning that Washington’s decision on September 22nd to release barrels from the Strategic Petroleum Reserve (SPR) and talk within the European Union of doing the same thing could force OPEC to cut its output.
Venezuelan Vice President Isaias Rodriguez on September 26th repeated President Hugo Chavez’s position that crude prices of $25 a barrel for the OPEC basket of crudes were “fair.”
Saudi Oil Minister Ali Naimi on September 25th backed the Clinton administration’s SPR decision, saying that: “The SPR release will stabilize the price of oil.” However, several of his OPEC colleagues were decidedly against the American move.
Libyan Oil Minister Abdullah el-Badri, in referring to the SPR release, said on September 26th that: “I hope this decision doesn’t shrink the price too much and we are forced to cut production.” El-Badri had said earlier that Washington acted prematurely in releasing the SPR barrels before OPEC’s September 10th decision to boost output by 800,000 b/d goes into effect on October 1st.
Algerian Oil Minister Chakib Khelil had said on September 25th that he did not believe the U.S. SPR release was a wise move on Washington’s part. “It is not in their own interests to do it. Someone has to refill stockpiles. It’s a very short-term measure that may give the wrong signal that OPEC does not have enough capacity.”
Meanwhile, OPEC Secretary General Rilwanu Lukman said on September 26th that the oil cartel was not bound by the group’s price band mechanism, which seeks to maintain crude prices within a $22-$28 a barrel range for the OPEC basket of crudes. “We are free to adapt to specific market conditions. We created the mechanism. The mechanism did not create us.”
( oilnavigator )