Mohammed Barkindo, acting secretary general of the Organization of Petroleum Exporting Countries, said that he believed the fundamentals of the oil market are out of balance, with above average crude stocks failing to have an impact on prices. Barkindo said that if prices fell too low OPEC could consider some sort of intervention, but he said OPEC doesn'thave an official price level that would trigger a production cut. But Barkindo also said OPEC is very concerned with the outlook for the global economy.
"We would not like to take any action that will precipitate a further deterioration of the global economy," he said. He also said geopolitics were having a greater effect on prices than market fundamentals, which could keep prices artificially high.
Barkindo said OPEC would monitor developments in all OECD countries including the U.S., as well as the emerging markets, particularly in Asia, which account for the bulk of incremental demand coming from developing countries.
The acting secretary general also said that any price band should reflect the rising cost of exploration and production. "Almost all projects either onshore or offshore have skyrocketed in the past several years," he said. "We are looking at the current price within the concept of rising costs."
Barkindo said OPEC had revised down the need for its members' crude in 2006 and 2007 to 320,000 barrels a day.
OPEC has been selling about 500,000 b/d less oil than the 28 million barrel upper limit imposed by the group. Some OPEC members are unable to produce up to their quotas, while others are exceeding theirs to meet demand.
Some officials within the group have identified $60/bbl as a line in the sand that they don't want prices to breach, fueling speculation that some ministers would push for an output cut from OPEC around that level.
