CARACAS, 1 June 2006 — OPEC will likely maintain its oil output levels for now but should consider a cut by September, Venezuelan energy minister Rafael Ramirez said yesterday ahead of a meeting here. The host of today’s meeting in the Venezuelan capital said that it was “too early” for the 11-nation Organization of the Petroleum Exporting Countries to consider reducing oil output. But the cartel of oil producers could decide on a cut “maybe from now until September,” Ramirez told reporters.
The OPEC members dominated by Saudi Arabia appear set to persist with their official production quota, which stands at a 25-year high of 28 million barrels a day. But they argue that oil supplies are plentiful, and that crude prices have been driven to record highs by political tensions over Iran and Nigeria.
Ramirez stressed that geopolitical jitters had stoked the oil market’s rally, but said there “exists a consensus” for OPEC to continue its current output levels. He also said that Venezuela would support any request from Ecuador to join OPEC. For now, Venezuela is the only Latin American member of the group, which is dominated by Gulf states. Sudan has also been invited to join.
OPEC Conference President Edmund Daukoru told reporters that the world oil market is “well supplied.” “Everybody has to do the best they can to moderate the (tight market) situation, but there is no question that the market is well supplied,” said Nigeria’s Minister of State for Petroleum on his arrival here Tuesday.
Oil reserves, he added, were at a five-year high, “so we have to look elsewhere for the cause of the tightness of the market.” “Downstream problems,” the minister said, included “geopolitical tensions, refining capacity.”
Asked what OPEC could do to lower crude oil prices, Daukoru said: “it’s not the way to put it, but there are structural problems, there are also intangibles like the fear factor, and the fear factor is a major factor.”
The organization began a series of consultations Tuesday in preparation for today’s conference, when market analysts believe they will decide to maintain their current production quota of 28 million barrels per day — its highest level in a quarter century. Venezuelan President Hugo Chavez on Tuesday said he hoped his fellow OPEC members would decide against any increase in production.