Bernardo Alvarez, Venezuelan vice-energy minister said Tuesday " we need a new benchmarking price reference reflecting the real market." the existing system is "a good tool, but not enough."
Underlining the need for a new mechanism to replace the OPEC price band Alvarez said the existing system is "a good tool, but not enough." Alvarez was speaking at the United Nations in Geneva, News Agencies reported.
Bridge News reported that Alvarez said that Oil futures markets based on three small-volume cruds distort prices and should be replaced by a new and more representative OPEC benchmark.
Alvarez called for the creation of Existing volumes of West Texas Intermediate, Brent and Dubai cruds can trade less than 1 million barrels per day (bpd) compared to OPEC's 22 million bpd, complained Alvarez. "This is a real problem," he said.
Alvarez also said according to news agencies that he would prefer a price mechanism that stabilizes prices over a long period. Developing oil-producing countries, he said, suffer when prices fall, closely following markets based on three small-volume cruds.
"We have to differentiate between real market barriers (such as European Union taxation) and the paper or virtual market," he added. "$8-9 of the price relates to movements in financial markets" and overall refers" to a very small quantity of oil on the market," he said, according to Bridge News.
By Elio Ohep
© 2000 Mena Report (www.menareport.com)