07/26 09:02
OPEC to Boost Output If Oil Exceeds $28, Silva Says (Update3)
By Alex Lawler


London, July 26 (Bloomberg) -- Crude oil prices, after rising by a third this year, need to climb another 12 percent before OPEC puts more oil on the market, said the group's new secretary- general, Alvaro Silva.

The Organization of Petroleum Exporting Countries' price benchmark, which the group uses to guide production policy, has risen 33 percent this year to $24.98 a barrel, in the middle of the group's target range of $22 and $28.

``We cut when prices go down to $22, and if they went up to $28, we like to take measures,'' Silva said in a telephone interview. Asked if prices would have to exceed $28 for OPEC to raise supply, he said, ``this is the general rule of the band.''

Some OPEC officials, including president Rilwanu Lukman, have said the group may raise quotas in the fourth quarter. Members are already exceeding the current target to maintain market share and raise revenue. That suggests the group may raise quotas even if prices are within the band, analysts said.

``OPEC would like to raise output in the fourth quarter because they know if they don't they will end up with various compliance problems,'' said Lawrence Eagles, head of commodities research at GNI Ltd. ``If prices are close to $25 in September, they will probably raise output.''

Last month, OPEC named Silva, then Venezuela's oil minister, to replace Ali Rodriguez as the group's secretary-general as of July 1. As President Hugo Chavez's oil minister, Silva often voiced support for high oil prices. Last May, he said $25 a barrel should be OPEC's minimum price.

The group, which is scheduled to meet next on Sept. 18, has yet to reach a position on supplies for the last three months of the year, Silva said, speaking from OPEC's Vienna headquarters. OPEC's quotas now are at an 11-year low.

``Until now, the market has been relatively stable,'' he said. ``The consensus is to observe the market and exchange ideas.''

OPEC wants to hold the September meeting in Osaka, Japan, instead of Vienna. An energy conference, including several OPEC ministers, is being held in Osaka days after OPEC's meeting.

``There is a consensus that the meeting will be in Osaka,'' Silva said. ``We're waiting for official confirmation from the Japanese government.''




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