PARIS, 30 April 2004 — OPEC officials have hinted at the possibility of expanding the organization’s official price band, a move that could support higher oil rates and draw the ire of consuming countries.
The idea was first floated earlier this week by the president of the Organization of Petroleum Exporting Countries, Purnomo Yusgiantoro, who said the organization could consider expanding the band by $4 to take account of the sliding dollar. The weaker greenback has cut into dollar-denominated oil revenues earned by OPEC producers.
The band ranges from $22 to $28 per barrel. When prices climb above $28, OPEC in theory would boost output, while prices below $22 would prod OPEC to limit production.
The upper limit of the band has in fact been breached for months. But OPEC maintains that the spurt in prices reflects speculation and geopolitical tension rather than a shortage of oil on the market. But despite the spike in prices, with rates now above $30 a barrel, OPEC in fact decided to cut production by 2.5 million barrels a day as of April 1.
Qatari Energy Minister Abdullah Al-Attiya, speaking during a conference here, said yesterday that OPEC would likely review the four-year-old band at an informal meeting during an international oil summit in Amsterdam on May 21. But he stressed that no official proposal had been put forward to change the band.
“On the 21st of May you will have a chance to see what is going on,” he said. “What the new band will be — it’s still not very clear to me.”
In London, oil prices fell slightly late yesterday, a day after the latest snapshot of US oil inventories renewed traders’ fears about supplies.
Brent North Sea crude oil for June delivery lost three cents per barrel to $34.28 in late trading. New York’s reference light sweet crude June contract was nine cents lower at $37.37 in early deals.