OPEC President and Venezuelan Oil Minister Ali Rodriguez said on October 24th that the cartel would have to consider “very carefully” boosting production by more than the 500,000 b/d increase called for under the cartel’s price band mechanism.
Under the mechanism, if the price of OPEC’s basket of seven crudes reaches over $28 a barrel for 20 consecutive working days, an increase in output of 500,000 b/d will be automatically triggered.
The current period began on October 1st, and the mechanism should be reached on October 27th if prices remain at current levels.
Rodriguez indicated that OPEC ministers would not wait until their November 12th meeting to increase production under the mechanism as many insiders had suggested, saying that: “the band should take effect automatically as we have agreed within OPEC.”
He reiterated that oil supplies exceed world demand, but noted that “if there is a real increase in demand, a substantial one, for example if the winter is very cold, then as we have always maintained, OPEC would be ready to satisfy this demand for crude.”
Sources have suggested that Saudi Arabia and other members will push for an increase in production at the end of the month, if the mechanism is triggered.
Qatari Emir Sheikh Hamad bin Khalifa al-Thani cautioned on October 24th that soaring oil prices could soon drop and that the group’s oil policy should take this into account.
“The oil prices remain related first and foremost to the market factors and fluctuations … and the rise we see today may turn into a fall tomorrow,” he said.