As crude prices continue to soar in the week beginning September 4th, OPEC is wrestling with how much crude it wants to pump into oil markets when the group’s ministers meet on September 10th in Vienna.
It is all but certain that the OPEC price band mechanism will be activated – triggering an automatic 500,000 b/d increase -- as the price of the OPEC basket of crudes will likely remain over $28 a barrel for the 20th working day that should be reached on September 8th.
Saudi Arabia has made it clear that it wants a revision of the mechanism as it has realistic concerns that price hawks Venezuela and Iran will resist any additional barrels over the mandated 500,000 b/d. Although OPEC delegates recognize that a 500,000 b/d supply increase would maintain the status quo and probably not cool off meteoric prices, they are expressing concern that too high a boost could backfire.
An OPEC delegate was quoted on September 5th as saying that: “Increasing by too much could be the straw that breaks the camel’s back.” A report on September 5th suggested that OPEC members had pumped more than 29 million b/d in August, reflecting the highest output from the oil cartel since 1981.
Saudi Crown Prince Abdullah bin Abdul-Aziz is expected to reassure Western consumers that Riyadh will work to stabilize crude prices when he addresses world leaders at the U.N.’s Millennium summit in New York on September 6th. He is also slated to meet U.S. President Bill Clinton on that day.- ( Oilnavigator)
