The Associated Press
BRASILIA, Brazil - Venezuela and other OPEC nations are ready to increase oil production by 500,000 barrels per day if by mid-September prices continue above $28 per barrel, Venezuelan President Hugo Chavez said yesterday.
"If during a period of 20 days prices kept above $28, we will act firmly to increase production as internally agreed by OPEC," the Venezuelan leader told reporters.
Venezuela has proposed OPEC members to stick to an oil-price band between $22 to $28 the organization approved in a meeting last March. The self-imposed price band system requires the cartel to add an extra 500,000 barrels of oil to the market if prices stay above $28 a barrel for more than 20 consecutive days.
However, the last time prices surpassed that ceiling, OPEC ignored the band system.
OPEC said the value of its basket of seven crude oils averaged $31.37 per barrel Tuesday. By some counts, if prices remain at current levels or higher, that period would be reached Sept. 10, the day OPEC oil ministers are scheduled to hold a regular meeting in Vienna to decide whether to increase production.
Soaring crude oil prices this month have increased pressure on the group to increase output for the third time this year. OPEC increased output in March and in June by a total of 2.4 million barrels a day.
Chavez said that most OPEC members had reconfirmed adherence to the band mechanism as a result of a visit he paid early this month to OPEC members, including Iraq. He invited chiefs of state for a summit of the oil cartel's 40th anniversary in Caracas in late September.
"The Caracas meeting will certainly strengthen that (price band) position. We need a balance on prices and market. We don't want prices shooting up from $10 to $40 overnight, but we neither want a price collapse to $8 per barrel," he said.
Chavez is in Brazil to attend a South American summit, whose main goals are to build inter-continental roads and railroads to boost trade and economic integration of the region's twelve nations.
Speaking during a breakfast with businessmen, Chavez disclosed that the World Bank has given a technical approval for a "trans-Caribbean" pipeline to transport oil across the Caribbean islands. He said his government is giving "high priority" to the project, but he would not disclose details on the cost or course.
"It would carry abundant amounts of oil and could even reach Florida," he said.
Venezuela has the western Hemisphere's largest oil reserves. The United States and Brazil are among its main customers.