The Organization of Petroleum Exporting Countries says it will cut production later this year if the price of oil continues to drop. The statement by the OPEC secretary general comes along with a prediction that there will be more oil on the world market than needed next year.
OPEC secretary general, Alvaro Silva-Calderon, told reporters the market is more than well supplied, and could be over-supplied next year if production is not reduced further.
Last month the cartel made the surprise decision to cut production by 900,000 barrels per day, effective November 1, to keep prices in the preferred band of $22 to $28 per barrel. According to OPEC, the average price this year is almost $28 per barrel, but the price dropped more than $1 a barrel in the past two days, to less than $27 a barrel.
Mr. Silva-Calderon says OPEC ministers will meet again in December to review the situation.
"We need to wait for a period, in this case a short period of a month in order to take the appropriate decision," he said. "The big concern will be not high prices, but low prices."
Mr. Silva-Calderon forecasts there will be, as he put it a lot of oil on the market in 2004. He says OPEC wants to avoid prices slumping to as low as $10 per barrel, as they did in 1998.
Analysts say the issue of cooperation from non-OPEC oil producers such as Russia, Norway, and Mexico will be discussed at OPEC's December meeting.