The price for front month West Texas Intermediate (WTI) gained 46 cents a barrel to close at $26.64 on December 26th, thanks to a winter chill in much of the U.S. and warning words from OPEC heads of state and officials that the oil cartel is not only considering cutting its output when ministers next meet on January 17th, but could be contemplating a rather sharp reduction.
Venezuelan President Hugo Chavez, in his weekly radio address, said on December 24th that: “We have to go to battle to defend the price of our oil … because there are those who want us to give [oil] away.”
Chavez, who blamed some countries for playing a “dirty game” by trying to push prices back down to 1998 levels of $10 a barrel, said he hoped to take to the leaders of Saudi Arabia, Iraq, Libya and Algeria to coordinate a cut in OPEC’s output, if required, to defend a “fair price.”
Libyan leader Colonel Muammar Qaddhafi took a more defiant tone, recommending in a letter to Chavez on December 25th that the cartel should stop pumping crude for one or two years.
“Since the issue is one of aggression on the resources of the people of OPEC, then our last resort might be halting oil pumping completely for a year or two,” the Libyan leader said in his letter.
Although others were not willing to go as far, several OPEC ministers made it clear over the Christmas holiday weekend that the group believed that healthy production cuts were in order to prevent a further price collapse.
Algerian Oil Minister Chakib Khelil, who becomes OPEC’s next president on January 1st, 2001, suggested that OPEC will probably cut its output by “much more” than 500,000 b/d when the group next meets.
Indonesian Oil Minister Purnomo Yusgiantoro suggested on December 26th that his country would propose an OPEC cut of between 1-1.5 million b/d when the group meets in mid-January.
