Will OPEC raise output?

The group president of OPEC has said that organization ministers will raise output to protect the global economic recovery at a meeting in December, if oil prices rise to US$100 per barrel.

Jose Botelho de Vasconcelos, who is also Angola's oil minister, said that both producers and consumers were comfortable with oil prices at between US$75 and US$80 per barrel and that higher prices could put a brake on the global economy, Reuters reported.

"I think that a balanced price is always better," said Botelho de Vasconcelos before he boarded a flight to Brazil late on Sunday.

"You know that, if necessary, some countries are open to injecting more oil into the market and that will be done."

When he was asked if a rise in oil prices to US$100 per barrel would inevitably prompt OPEC to raise production at its 22 December meeting in Luanda, Botelho de Vasconcelos replied: "I believe so. We need to maintain the balance."

Yet, he also added that OPEC would first have to make sure that oil market fundamentals, in terms of supply and demand, were also balanced, adding that oil stocks remained high.

"We are aware that although oil stocks have been declining they are still at a certain level."

Oil prices reached US$82 last week, the highest in a year, in a rally many say was triggered by expectations of an economic recovery and a weak dollar rather than a tighter oil supply and demand balance.

Benchmark US crude oil futures were around US$80 a barrel on Monday.

OPEC, which controls about a third of the world's oil production, has been holding down output since September 2008 as the financial crisis hit demand and pressured prices.

 

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