OPEC asks experts to study quotas

OPEC Secretary General Alvaro Silva Calderon warned that changing the cartel's production quotas for member states "would undoubtedly carry certain risks and challenges." Calderon was speaking at the start of a meeting of high-level experts on quotas and said he had asked them to devise a system for determining future quotas.
"The OPEC secretary general said that given the importance and sensitivity of the issue, any attempts to revise the way in which quotas were allocated would undoubtedly carry certain risks and challenges," a statement said. "However," Calderon was quoted as saying, "it is hoped that by working together the member countries arrive at an objective approach that will not only further the interests of individual member countries but also enhance the cohesion of the organisation."

Calderon said the findings of the one-day meeting would be discussed by the OPEC secretariat when it meets. The Organisation for Petroleum Exporting Countries wants to ensure it produces enough oilto satisfy consumer countries, but is fearful of flooding the market once Iraq's exports get into full swing later this year.
During the last OPEC ministerial meeting on July 31, the cartel decided to maintain its current production ceiling of 24.5 mm bpd until September at least. OPEC would rather err on the side of caution and cut production, at the risk of letting the oil price soar, than to cede to the demands of the International Energy Agency and raise output to see the price plummet.

Western countries are calling for cheaper oil to boost their economies and allow them to rebuild their dwindling crude oil stocks. US fuel supplies are currently 6 % or 12 mm barrels below their 2002 level. Calderon remarked on Friday that quotas are OPEC's "essential tool for proactively managing the market to maintain security and stability at prices fair for producers and consumers alike."
The oil price eased slightly after an increase the day before, as ethnic tensions in Nigeria seemed to ease. In London a barrel of North Sea Brent for October delivery was trading at $ 29.65 after closing at $ 29.71. On the electronic market in New York the price of light sweet crude dropped by 10 cents to $ 31.78.

The price of an OPEC basket, the average of seven types of crude, slipped below $ 28 after hovering above that mark for 12 days in a row.
If the basket price had remained above this level for another eight days, this would have paved the way for OPEC to raise its crude oil output in order to stabilise the price between its target range of $ 22 and 28 per barrel. This price stabilising mechanism was adopted in March 2000 and allows OPEC to cut its production by 500,000 bpd if the price stays below $ 22 for 10 days and to raise output if it remains above $ 28 for 20 days