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Journalism of Courage
Oil prices fell heavily on Thursday as OPEC’s president said the cartel was considering a big output increase to make a ‘‘psychological impact’’.
US Energy Secretary Spencer Abraham fuelled the sell-off when he saw signs of extra supplies from Mexico, Nigeria and Russia, as well as Saudi Arabia.
US light crude was down 98 cents at$39.72 a barrel, extending profit-taking from last week’s $41.85 peak, a 21-year high. London Brent shed 68 cents to $36.42 a barrel.
OPEC President Purnomo Yusgiantoro said the group probably would have to raise supply allocations by more than 2.3 million barrels per day, 10 per cent, to have any hope of denting bulls’ enthusiasm.
He acknowledged that, with estimates of OPEC production already over official output limits, anything less than 2.3 million bpd would do little to reassure.
Purnomo said the options being considered for a meeting of the Organisation of the Petroleum Exporting Countries on June 3 in Beirut were for increases of two million bpd, 2.3 million or more than 2.3 million.
‘‘The third option is that we have a significant increase so as to give a psychological impact to reducing oil prices,’’ he said.
Leading OPEC member Saudi Arabia has already made a commitment to deliver real extra volumes of about 10 per cent in June, taking its production to 9.1 million bpd, whatever OPEC decides. —Reuters
