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OPEC
prices break
through ceiling
By Jose Zambrano
CARACAS - The average price of OPEC's set of
benchmark crudes crept higher than the US$28 a barrel
limit, established by the cartel itself, last week for
the first time since December 2000.
The basket
of crudes of the Organization of Petroleum Exporting
Countries closed on Friday at $28.69 per 159-liter
barrel, reaching an average of $27.60 for the month of
September and $23.49 since January, reported the Energy
Ministry of Venezuela, the only Latin American member of
the group.
At its meeting on September 19, in
Osaka, Japan, the OPEC nations decided to maintain their
limits on production at 21.7 million barrels a day,
unless the prices remained above the $22 to $28 price
band for more than 20 consecutive days. If that happens,
the members agreed to increase output by 500,000 barrels
a day to push prices back within the band.
The
last time that the OPEC basket surpassed $28 a barrel
was on December 4, 2000, when it reached $28.28. The
price band was established at the OPEC summit in
September 2000, a year after oil prices had suffered
historic lows.
After continuing a downward trend
throughout 2001, the average price of the OPEC basket
began to recover in July, marking a $25 average per
barrel, as a result of the threat of possible military
intervention in Iraq. In August, the average recorded
was $26, and in early September it reached $27.
The rise in oil prices, however, has not
prompted any comments from OPEC executives. The only
statements came from Venezuela, where energy minister
Rafael Ramirez said that his country would continue to
be a reliable oil supplier in case of shortages arising
from a potential US-led military attack against Iraq,
which is also an OPEC member.
Ramirez assured
that Venezuela could boost its current output of 2.5
million barrels a day to 4 million if the market
required. "There is a commitment to not use petroleum as
a political weapon against anyone. If a problem arises
in the supply of fossil fuels due to a war situation,
OPEC will place on the market the volume necessary to
keep the price within the band," said Ramirez. But the
minister insisted that the current supply was sufficient
and that the higher prices were largely the result of
the threats of war.
"The high levels of
production by oil exporting countries that are not part
of OPEC and the violation of the established quotes by
OPEC members contribute to a petroleum market that
continues to face oversupply," he said.
The OPEC
nations together surpass their own production quota by 2
million barrels a day, according to the admissions of
some of the cartel's spokespersons. Furthermore, Iraq -
an OPEC member but not a participant in the quota system
due to the international embargo against it - has an
output of 1.9 million barrels a day, compared to 1.1
million at the start of the year, according to the
executives of the "oil for food" program.
This
United Nations initiative allows Iraq to sell crude, but
establishes that the Arab nation may only use the
revenues to purchase food, medicine and other primary
necessities, under strict controls.
In addition
to the rumblings of a possible war against Iraq, oil
prices were affected last week by the passage of
Hurricane Isidore through the Gulf of Mexico. The
state-run oil giant Petroleos Mexicanos (Pemex) reported
that the hurricane forced it to reduce its production in
the Gulf to 1.38 million barrels a day, when normal
daily output is 3.3 million barrels.
Several oil
firms operating in the area had to evacuate their
workers from more than 500 oil platforms throughout the
Gulf. Mexico is not part of OPEC, whose 11 members -
Algeria, Indonesia, Iraq, Iran, Kuwait, Libya, Nigeria,
Qatar, Saudi Arabia and United Arab Emirates and
Venezuela - meet approximately 35 percent of the world's
oil demand.
(Inter
Press Service)
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