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OPEC to Reduce Production if Oil Price Drops
The Organization of Petroleum Exporting Countries (OPEC) will cut production by 500,000 barrels per day if the price of crude drops below 22 US dollars per barrel, warned Venezuelan Minister of Energy and Mining Alvaro Silva on Tuesday.
Under a decision made in Vienna on March 17, OPEC started a production cut of one million barrels of oil per day on Sunday, which has effectively stopped the downturn in international oil prices.
"Once the decision was taken, prices stabilized," Silva said, adding that the market needs time to react to the current cut.
Even after the reduction, "production is still 600,000 barrels of oil per day higher over world market demand," Silva said. "Prices were dropping and they would have fallen a lot more" if the production cuts were not announced.
On Monday the crude oil price dipped to 22.53 dollars per barrel, nearing the bottom line for the automatically-adjusting mechanism to act.
OPEC considers 25 dollars per barrel a fair price, and most consuming countries agree.
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