OPEC Leaders Warns of Collapse
Monday, July 31st 2000, 12:00 am
By: News On 6
CARACAS (AP) â€” The president of the Organization of Petroleum Exporting Countries warned Sunday that inventories continue to rise, in part because some OPEC members are over-producing, and that world oil prices could fall as a result, according to a report.
A collapse in oil prices ``could happen because stocks have been rising and if this tendency continues at the levels we're witnessing right now, we could have in the last quarter this year, a stabilization or a fall in oil prices,'' Ali Rodriguez was quoted as saying in an exclusive interview with the local daily El Nacional.
Neither Rodriguez, who is Venezuela's oil minister, nor other ministry officials could be reached for additional comment Sunday.
Rodriguez estimated that OPEC members are currently cheating by a total of 700,000 barrels a day. Rodriguez further said a rise in stocks of sour crude could also cause prices to fall further.
Rodriguez made no reference to additional barrels of oil currently coming from Saudi Arabia. Oil prices have fallen since the kingdom announced it would pump around 500,000 barrels a day more oil to lower prices, which were hovering around $30 a barrel.
Rodriguez was further quoted as saying that the price band mechanism needs further refinement. Under a so-called gentlemen's agreement, OPEC would raise its output by 500,000 barrels a day if the price of the basket stays above $28.00 a barrel for 20 consecutive days.
September crude oil rose 16 cents to $28.18 a barrel on Friday on the New York Mercantile Exchange.
OPEC members in June agreed to raise output by 708,000 barrels a day.