OPEC President Purnomo Yusgiantoro said on Monday the producers’ group might decide at a March meeting to cut output limits again in May if supply curbs in April were not enough to keep prices between $22 and $28 a barrel.
“By the end of March we will meet again and if it (the April cut) is not enough we can consider another cut for May,” Purnomo, who is also Indonesia’s oil minister, told reporters.
OPEC ministers decided last week to reduce official output limits by one million barrels per day, excluding Iraq, from April 1 to avoid any price collapse in the second quarter when demand for oil ebbs at the end of the northern hemisphere winter.
The group also said it would eliminate with immediate effect leakage pumped above the current output ceiling of 24.5 million barrels per day, estimated at about 1.5 million barrels per day.
Purnomo said any further production cut from 23.5 million barrels per day would depend on price. The group has a target to keep the price of a reference basket of seven crudes in a $22 to $28 range.
“It’s uncertain, it depends on the price. If the price is still good in April maybe not. We are still watching developments carefully,” he said. The Organization of the Petroleum Exporting Countries is scheduled to meet on March 31 in Vienna to discuss production policy.
The group is worried by forecasts of big falls in demand. The International Energy Agency, which advises 26 industrialized nations on energy issues, has predicted that oil demand in the second quarter might slump by as much as four million barrels per day, more than double the normal seasonal downturn.
OPEC’s basket price stood at $28.96 a barrel on Thursday, but will likely rise after benchmark crude futures in London and New York rose more than 50 cents on Friday. U.S. markets are closed on Monday for a public holiday. “The (April) cut is aimed to maintain the price range,” Purnomo said.