OPEC President and Venezuelan Oil Minister Ali Rodriguez said on October 31st that the cartel’s latest production increase of 500,000 b/d announced on October 30th should satisfy world oil demand. Rodriguez said that: “For now, I think the 500,000 b/d is enough to meet demand.
We have to be careful (about more increases) because if demand falls and stocks are building, prices will fall next year.” He reiterated that OPEC will act to boost output if the group’s price band mechanism is reached again.
Under the 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 output of 500,000 b/d will automatically be triggered.
The 20th day was reached on October 27th, prompting Rodriguez to call for the 500,000 b/d release on October 30th. Rodriguez also said that OPEC would move to raise production again if a cold winter in the U.S. prompts a new surge in prices. “In that case, OPEC is willing to put the oil on the market that is lacking,” he said.
Oil markets had waited anxiously to see whether Iraq would make good on its threat to halt exports if its demand for payment in Euros instead of dollars as of November 1st was not met, as Saudi Arabia tried to reassure traders that it and other producers would be able to cover any shortage of oil supplies.
Saudi Oil Minister Ali Naimi said on October 31st that: “The kingdom and major producers have more than once reiterated their commitment to maintain sustainable and credible supplies. Whenever a disruption in supply occurs because of Iraq or other (problems), all producers, including Saudi Arabia, will be ready to fill in the need.
”However, it is clear that Iraq’s fellow OPEC members would face a real struggle in filling the supply gap should Iraq halt its average 2.3 million b/d of crude exports. - (oilnavigator)