The Organization of Petroleum Exporting Countries - OPEC - is considering a further cut in output to shore up oil prices. Indonesia's oil minister, Purnomo Yusgiantoro says OPEC would consider further reducing oil output to keep the price from falling below $22 a barrel.
Mr. Yusgiantoro is the current head of the Organization of Petroleum Exporting Countries. His comments come a few days after OPEC unexpectedly announced it intends to cut production limits by one million barrels a day starting April 1. The producers are worried that as demand tails off at the end of a particularly harsh winter in the northern hemisphere, the price will slip out of their target range of $22 to $28 dollars a barrel.
Mr. Yusgiantoro told reporters in Jakarta on Monday that the group will meet again in March to review the situation. But analysts say OPEC fears of a drop in the oil price should be offset by low international reserves, particularly in the United States, and the prospect of governments buying oil to rebuild their stocks.
According to the latest figures, OPEC's index price of a basket of crude oils stands at $28.96.
U.S. crude stocks are at historically low levels, standing at 269 million barrels at the beginning of the year, the lowest year-end level since 1974.
The head of the U.S. Energy Information Administration, Guy Caruso, said last week that the oil market was vulnerable to surprises that could send prices higher.
OPEC says the current relatively high oil price is the result of market speculation and geopolitics more than supply restrictions.
The group's decision to support prices with production cuts has drawn warnings from Washington. The U.S. secretary of the treasury, John Snow, said last week that any decrease was "regrettable" and would effectively be a tax on American consumers.