OPEC president Chakib Khelil said today the oil cartel could raise output to put pressure on rival exporters if they fail to agree to reduce oversupply in world markets. OPEC is seeking a cut of 500,000 barrels per day (bpd) by rival exporters including Russia, Mexico and Norway in order to trigger a 1.5-million bpd cut of its own.
"If we don't cut production by 1.5-million barrels per day in January, it is clear that prices will collapse quickly and we can add production as well to exert additional pressure," he told reporters at a media forum.
OPEC has previously said it would not dip into its substantial spare production capacity, measuring about 5 million bpd, because cuts should be a sovereign decision by independent exporters based on national interest. Mexico, Norway and Oman have all agreed to substantial cuts in line with OPEC's demands, but Russia has offered only a small reduction.
"It is neither in the interest of Russia or other countries in OPEC and non-OPEC that prices collapse," Khelil said.
The U.S. Dept. of Energy reported yesterday that the price of diesel at the pump fell this week to $1.223 a gallon. Diesel prices have fallen 10 straight weeks since rising to $1.527 the Monday following the September 11 terrorist attacks.