OPEC President Ali Rodriguez said on October 27th that the oil cartel would announce an output hike late on October 30th if prices remain at current high levels. When asked when OPEC would announce an increase in production, he said that: “At midnight on October 30th, if prices stay above $28.”
Under the cartel’s price band mechanism, if the price of OPEC’s basket of seven crudes remains over $28 a barrel for more than 20 consecutive working days, an increase in production of 500,000 b/d will automatically be triggered.
The mechanism should be reached on October 27th, although a delay of one day in calculating the basket price means that an official announcement will not be made until October 30th. Geneva-based industry consultant Petrologistics said on October 27th that OPEC oil production will increase in October by 611,000 b/d to 29.51 million b/d.
The group’s report showed a rise in output from Saudi Arabia of 353,000 b/d to 8.68 million b/d in October. Other members expected to see increased production are Venezuela, with an additional 90,000 b/d to 3.02 million b/d, Nigeria with 60,000 b/d to 2.155 million b/d, the U.A.E. with 40,000 b/d to 2.29 million b/d and Kuwait with 55,000 b/d to 2.26 million b/d.
In September, the cartel agreed to raise production by 800,000 b/d in an effort to dampen soaring oil prices, putting the quota for the ten members, excluding sanctions-bound Iraq, at 26.2 million b/d from October 1st. Petrologistics forecasts October output for the ten at 26.56 million b/d, up from 25.93 million in September.