OPEC, the cartel that controls half of world crude exports, is studying whether to raise the target price of its reference index of crudes from $22-$28 a barrel, OPEC President Purnomo Yusgiantoro said on Tuesday.
"At the moment OPEC is analyzing whether to change the range of the OPEC price band with a new range," Purnomo, who is also Indonesian oil minister, told reporters. He did not give any value for a new range.
"The $22-$28 range was decided in 2000 and now it's 2004. Some OPEC members have proposed a change, therefore we are now analyzing whether to change the range," he said.
Venezuela, the third-biggest producer in the OPEC 10 which excludes Iraq, has been a vocal supporter of a higher band for the reference price, which stood at $32.58 a barrel on Friday.
The reference price, calculated daily from a basket of seven crude grades, has been above the upper end of the target range for all but one working day since last November as international benchmark prices in London and New York have bubbled above $30 a barrel for much of the year.
U.S. crude hit a 13-year closing high last month above $38 a barrel due to fears of a supply crunch in the United States and booming demand in China, as well as the escalation of violence in the Middle East, home to two-thirds of global oil reserves.
Purnomo said a higher price band would not hurt the global economy. "At the moment the oil price is at $32-$33 and we see that there is no problem. Chinese demand is extraordinary," he said. Asked whether the group was looking at a $25-$32 target range, Purnomo said: "I don't know yet, we are still looking at it."
"My personal view it will not be $22-$28 but higher, by how much I don't know."
Venezuelan Oil Minister Rafael Ramirez said on Monday Caracas would propose at OPEC's scheduled meeting in September that the target range be increased by $2.
He said a committee of OPEC vice ministers was discussing the proposal, which would lift the target band to $24-30 a barrel. Ramirez said there was little chance of getting the proposal on the agenda for OPEC's June 3 meeting in Beirut.
Nigeria, OPEC's fifth-biggest exporter, suggested in April that the price band should be lifted to $25-$32.
But Iran, which ranks second only to Saudi Arabia as an OPEC producer, said on Sunday prices should be kept at the top end of the current band.
"We should keep to the higher side of the band, $25-$28, and not change it," Iranian Oil Minister Bijan Zanganeh said.
The Organization of the Petroleum Exporting Countries introduced the $22-$28 price target in March 2000 under an informal mechanism to raise or cut group output by 500,000 barrels per day if prices should move outside of the band for a set number of consecutive days.
Under the mechanism, the group may increase supplies if the basket price moves above the upper range for 20 working days. It may also cut supplies if the basket falls below the lower limit for 10 days.
Earlier this year, several OPEC members justified a high reference price above the band's upper limit to a fall in the U.S. dollar, the currency of world oil trade.