New Organization of Petroleum Exporting Countries Sec. Gen. Al�odr�ez Araque Thursday acknowledged there is "total consensus" among OPEC member states to slash production in an effort to prop up destabilized oil prices, but that the volume to be cut from supply had yet to be agreed.
Several formulae�ranging from a "straight cut" to a cut that would function as "a kind of test" of the crude market�were being studied, he said, in the run up to OPEC's Jan. 17 meeting in Vienna. He said ministers were currently leaning toward a straight cut.
"Everything indicates that it will be necessary to make a cut, but the amount is difficult to predict as it must be decided upon unanimously among OPEC members," he added.
Chakib Khelil, the new Organization of Petroleum Exporting Countries president, Friday forecast world oil demand would drop as much as 1.3 million b/d in the first quarter, according to the OPEC news agency.
Speaking at a press conference, Khelil, Algeria's Energy and Mines minister, said that because crude supply was outpacing demand by 1.4 million b/d, the organization's 11 ministers "would go for a cut of 1 [million]-1.5 million b/d" when they meet on Jan. 17 in Vienna, in order to stabilize oil prices at around $25/bbl.
Khelil added that OPEC would also decide whether to hold an extraordinary conference before Mar. 1 to monitor the oil price situation, but only "if the market needs a decision."
Former Venezuelan energy and mines minister Rodr�ez stressed that the recent fall in oil prices was "fundamentally the result of growing world crude inventories," which had resulted from overproduction of some two million b/d between April and September last year and by around 1.4 million b/d after September.
"In addition to that phenomenon," Rodr�ez added, "another has emerged that is not so new, but has had particular relevance over the past year, which is the building of secondary and tertiary inventories that do not appear in official statistics, but which increases the volume of inventories."
Rodr�ez suggested that were OPEC to agree to cut production, it was "highly likely" that non-OPEC producers including Mexico, Oman, Angola, and Russia, might follow suit.
"Now Kazakhstan also has expressed its position in favor of continuing to collaborate with OPEC policies," he said.
He noted that he and outgoing OPEC Sec. Gen. Rilwanu Lukman were scheduled to meet this Sunday with US Secretary of Energy Bill Richardson to discuss the current state of play in the world's crude market. Mexico's new oil minister, Ernesto Martens, is also slated to meet with his Venezuelan counterpart on the same day.
Khelil was appointed to his post in November after Rodr�ez, then the OPEC president, was selected to be secretary general.