Purnomo says OPEC may reset oil price range
Purnomo says OPEC may reset oil price range
Fitri Wulandari, The Jakarta Post, Jakarta
The Organization of Petroleum Exporting Countries (OPEC)
is reviewing its current oil price band to adjust to the U.S.
dollar depreciation against major currencies and inflation,
according to the cartel's top official.
OPEC president Purnomo Yusgiantoro said the price band of
US$22 to $28 per barrel was deemed no longer suitable for present
conditions as it had been set in 2000.
"We are studying (a new price band)," Purnomo, who is also
minister of energy and mineral resource, announced on Tuesday.
Asked if the price band would be changed to between $25 and
$32 as suggested by analysts, Purnomo replied it was possible.
Purnomo could not confirm if the result of the study would be
available when the oil cartel holds its next meeting in June.
"It depends on how (long) the study takes," he said.
The price band mechanism is aimed at keeping a basket of crude
prices within a certain range by increasing production if the
price stays above $28 barrel per day for 20 consecutive trading
days. If the price stays below $22 per barrel for 10 consecutive
trading days, OPEC could cut output.
The OPEC reference basket price is the average price of seven
crude oils, namely Saharan Blend (Algeria), Minas (Indonesia),
Bonny Light (Nigeria), Arab Light (Saudi Arabia), Dubai (United
Arab Emirates), Tia Juana Light (Venezuela) and Isthmus (Mexico).
But OPEC, which produces a third of the world's oil, has
decided not to bow to the price band even though oil prices have
hovered above the range since Dec. 5. The cartel argued that the
soaring oil price was due to nonfundamental factors, mainly
speculation by traders.
On Monday, oil prices ended higher as traders reacted
nervously to weekend news of attempted attacks on Iraq's main
southern oil terminals.
AFP reported New York's reference light sweet crude June
contract rose 51 U.S. cents to $36.97 per barrel in late deals.
The price of benchmark Brent North Sea crude oil for June
delivery climbed 49 U.S. cents to $33.58 per barrel in London.
Elsewhere, Purnomo said that he planned to visit Russia in
September to attend a seminar on oil and gas held by the
Indonesian Embassy in Moscow to celebrate its 50th anniversary.
Russia is a not an OPEC member, but has a quite significant
oil production of some nine million barrels per day (bpd).
Russia plans to lift output to 9.5 million bpd this year.