OPEC should take preemptive action to cut oil output if a supply glut emerges rather than waiting for prices to tumble before acting, Qatar's oil minister said Sunday.
Speaking to journalists ahead of a meeting of the Organization of Petroleum Exporting Countries (OPEC), Abdullah al-Attiyah said the 11-nation cartel should override its price stabilization mechanism, which theoretically triggers output hikes when prices are high and cuts when they are low.
Al-Attiyah echoed the fears that other OPEC ministers have expressed about excess supply by saying that the group would "have to look very carefully" at analyst forecasts of a production glut early next year.
"If we have more supply in the market, what will happen next year?" he said.
"If it happens that there is a lot of production (surplus) in the second quarter and the oil price drops sharply below 22 (dollars/barrel) we will have to cut production... so we try to avoid" that, al Attiyah said.
Asked whether OPEC should wait until the price mechanism system triggers a cut when prices fall below 22 dollars a barrel he said "I hope not."
The mechanism triggers an output increase if prices remain over 28 dollars a barrel for 20 working days or a production cut if they persist below 22 dollars for 10 consecutive working days.
Oil ministers here are juggling the current situation of high prices, which would demand another hike at the end of November under the price mechanism, with forecasts of a supply surplus next year, which could bring prices crashing down.
Many have said that the price mechanism should be overridden so as not to trigger another output hike at the end of November.
"We did discuss it in this way but my personal opinion is that we should be very careful to relate the mechanism to the inventory or the supply," said al Attiyah -- VIENNA (AFP)
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