US President-elect George W. Bush said on December 20th that he will work with OPEC to increase the group’s oil production.
He said that: “The quickest impact on the price of crude oil will be to work with OPEC nations and to foster relations so that they may be convinced to open up their spigots to keep the pressure off prices.”
Bush added that: “One of the things we’re going to have to do is to start up a strong diplomatic effort to work with our friends in the Middle East to have an energy policy there that is respectful to their friend here [the U.S.] and other democracies.”
The president-elect also indicated that in his first 100 days of office, he would review federal policies restricting access to many government lands for drilling because he is interested in increasing domestic natural gas output, which is “immune from price manipulation” by OPEC.
Bush’s comments came as oil prices for U.S. benchmark West Texas Intermediate fell to eight-month lows, dropping almost $10 in little more than a month.
Cartel members had at their last meeting agreed to suspend the group’s price band mechanism, as four output increases during the year had failed to dampen high prices.
But, now that prices for OPEC’s basket of seven crudes have neared the $22 range, the idea of using the mechanism has been resurrected.
OPEC President Ali Rodriguez said on December 18th that OPEC would cut production if prices continued to drop, but only if the group’s price band mechanism is triggered.
If OPEC’s basket price dips below $22 on December 20th as expected and prices continue to weaken, the mechanism could be triggered on December 30th.
Some members, however, have called for a production cut of 1 million b/d regardless of whether the price band is triggered when OPEC ministers next meet on January 17th in Vienna.
Iran’s OPEC governor Hossein Kazempour Ardebili, Kuwaiti Oil Minister Sheik Saud Nasser al-Sabah, and Libyan leader Moammar Qaddhafi have indicated that slicing production in January will be necessary to restore market balance. - (oilnavigator)
