Indonesia expressed support on February 12th for a proposed review of OPEC’s price basket, which it contends does not accurately reflect market prices.
Indonesian Energy Minister Purnomo Yusgiantoro said that: “We support the OPEC study because the current basket does not reflect real crude market prices.” OPEC Secretary General Ali Rodriguez had proposed a review of the group’s pricing system, including the possibility of including more heavy crudes in the reference basket.
The current basket is composed of Algeria’s Saharan Blend, Indonesia’s Minas, Nigeria’s Bonny Light, Saudi Arabian Light, The U.A.E.’s Dubai, Venezuela’s Tia Juana and Mexico’s Isthmus. Yusgiantoro said that: “U.S.’s West Texas Intermediate and Brent are markers of crude.
They are important to be studied.” The cartel’s reference basket has garnered increased attention since OPEC established the price band mechanism in 2000 to work towards keeping the basket price between $22 and $28 a barrel.
Under the mechanism, if prices fall below $22 a barrel for more than 10 consecutive working days or rise above $28 a barrel for more than 20 trading days, a decrease or increase in production will automatically be triggered.
The group had agreed on January 17th to slash production by 1.5 million b/d from February 1st to prevent a price slide during the second quarter, when stock levels are generally higher.
Qatari Oil Minister Abdullah al-Attiyah said on February 11th that a further production cut could be unnecessary at the group’s next meeting in March.
Al-Attiyah said that: “If prices remain at Friday’s [February 9th] closing levels, then there is not a need to decrease production.” The OPEC basket price stood at $26.98 on February 9th, down from $27.67 the previous day.
© 2001 Mena Report (www.menareport.com)
