Saudi Arabia, the organisation strongman, pressed home the need for a production rise on 7 January. ‘Oil prices have significantly increased and there should be a raise in production to bring the price down,’ said Foreign Affairs Minister Prince Saud al-Faisal at a Riyadh press conference.

Initial indications suggested that OPEC would increase production by 1.5 million barrels a day (b/d), but it was unclear what the base line for the increase would be. ‘There are two proposals – 1 million b/d and 1.5 million b/d,’ said acting Kuwaiti Oil Minister Sheikh Ahmad al-Fahad al-Sabah on 8 January. ‘We would favour raising by 1 million and would agree to 1.5 million if necessary.’

OPEC in December agreed to cut production by 1.7 million b/d to 23 million b/d starting on 1 January – a target it is unlikely to have reached yet. The question many in the market are asking is whether the latest increase will be made on top of the new quota or the old actual output figure.

In any case, there are questions over how far OPEC can handle an output rise. ‘Most – if not all – of the increase will come from Saudi Arabia,’ says Geoff Pine, an oil analyst with the US’ Sempra Energy Trading. ‘In the unlikely scenario of Iraq and Venezuela shutting off at the same time, OPEC could be really stretched. But the second quarter looks pretty good because demand will fall and OPEC has a chance to balance the market without the price dropping much.’

The main reason for the high prices – which have hovered around $30 a barrel since the beginning of the month – is the crisis in Venezuela. On 6 January, Energy Minister Rafael Ramirez announced a radical new measure to break PDV’s month-long strike: split the company in two. Ramirez said the move would help cut exorbitant bureaucracy at the company and increase capacity. But sceptics contend that the plan is only being introduced as a bargaining ploy in the government’s dispute with PDV workers.