Fears of a harsh winter and low supplies are pushing oil prices up. Now, the Organization of Petroleum Exporting Countries, OPEC, says it might cut production quotas, which could drive prices even higher.
Oil prices soared unexpectedly late Friday, and London Brent crude, the benchmark price, closed at $31.6 per barrel. Energy experts say they fear the price rise trend could continue, since heating oil stocks are low, and colder weather has already begun in the northern hemisphere.
OPEC oil ministers took a surprise decision last month to cut production by 900,000 barrels per day, with effect from the beginning of November. Wolfgang Ruttenstorfer, head of OMV, a leading oil and gas concern, said the OPEC decision is cause for concern. "If we are going to have a strong winter, a hard winter, it might have been premature to do that, and we could see quite high crude oil prices over winter. Our demand side in central and eastern Europe is 100 million people and consumers. The demand side is very sensitive to price increases, because they have quite low incomes per capita, and, therefore, if the crude oil price is too high, we see it immediately in the demand side in our market," he explained.
Mr. Ruttenstorfer said he hopes OPEC can keep to its average basket price of $25 per barrel. But OPEC member Venezuela wants the organization to set a much higher band for oil prices.
The general secretary of the oil cartel in Vienna, Alvaro Silva Calderon, told reporters Friday there could be a further cut in production that would keep prices high.
Mr. Calderon is concerned that there could be too much oil on the market in the spring of 2004. By then, experts believe, Iraqi oil exports should be returning to levels prior to the Iraq war.
OPEC's ministers are to meet again in December in Vienna to review the market situation.