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Rodriguez says OPEC price band will be $22-$28 per barrel Increase or decrease of 500,000 barrels a day in production would kick in if prices stay outside set price range for 20 days Sandra Hernandez Associated Press Writer
OPEC plans to increase oil output whenever the price of the cartel’s crude basket exceeds $28 a barrel and lower output when the price dips below $22, Venezuelan Oil Minister Ali Rodriguez said March 31.
Rodriguez, the new president of the Organization of Petroleum Exporting Countries, said the price-band plan was approved by OPEC members during their March meeting in Vienna, Austria.
The system, which will allow quick supply changes to keep oil prices within a set range, had been proposed by Venezuela.
Rodriguez told a news conference here that if prices move outside the set range for 20 consecutive days, the oil cartel will increase or decrease production by 500,000 barrels a day until the price moves back within the range.
He noted that the additional production would be divided among the members based on their individual production quotas. Venezuela’s share amounts to 11.8 percent or 59,000 barrels a day, he noted.
OPEC keeps watch on prices by calculating the value of a “basket” of seven different crude oils. The year-to-date average basket price is $26.24, which is about the level being bid for future deliveries.
Crude for delivery in May closed March 31 at $26.90, up 20 cents, on the New York Mercantile Exchange, while front-month Brent crude from the North Sea closed up 14 cents at $24.77 on the International Petroleum Exchange in London.
Agreement to increase by 1.7 million barrels a day At its Vienna meeting, OPEC agreed to increase production by about 1.7 million barrels a day. The total world increase is likely to reach 2 million barrels a day because non-OPEC producers Mexico and Norway said they would raise production, and because OPEC members continue to cheat on their quotas.
The United States and other oil-importing countries, which have seen gasoline and heating oil prices soar in recent months, sought output increases of between 2 million and 2.5 million barrels a day.
Venezuela is the world’s third biggest petroleum exporter and one of the top foreign suppliers of oil to the United States. Petroleum accounts for more than three quarters of the South American nation’s export earnings.
President Hugo Chavez confirmed March 31 that Venezuela would increase its oil output by 125,000 barrels a day under the new OPEC accord.
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