Wednesday June 24 12:11 PM EDT
OPEC Agrees To Cut Oil Production
DIRK BEVERIDGE AP Business Writer
VIENNA, Austria (AP) - OPEC agreed today to a new round of oil production cuts,
promising to take 1.4 million barrels a day off the glutted market in an attempt to boost
severely depressed prices, sources said.
Ministers of the 11 OPEC nations held critical talks on the supply problem that recently
pushed prices of crude to 12-year lows and stirred some concerns about a possible
repeat of the disasters that struck the global oil industry in 1986.
OPEC had no immediate confirmation of the exact pledges by each member to cut
output, but figures given privately by OPEC delegates put the total at around 1.4 million
barrels - on top of an earlier bunch of cutbacks that failed to help the market this spring.
Traders appeared unsure about whether OPEC was doing enough. Prices rose
modestly on news that OPEC had reached an agreement but soon reversed into
negative territory.
Brent crude oil to be delivered in August was down 14 cents at $13.78 per barrel by
late afternoon on London's International Petroleum Exchange, giving up gains of more
than 30 cents that had pushed Brent above $14 per barrel earlier in the day.
OPEC delegates said the production cuts would be led by the Saudis, who are
chopping 425,000 barrels a day from their production beginning July 1. Venezuela has
promised to cut 325,000 barrels a day, followed by Iran's pledge to restrain output by
190,000 barrels daily.
Kuwait, the United Arab Emirates and Nigeria each pledged to cut production by
100,000 barrels daily, with smaller cuts coming in from smaller OPEC members,
delegates said on condition of anonymity.
Analysts have cautioned that OPEC needs to show that it can deliver more than just
promises. Even though producers found themselves in serious economic trouble by
flooding the market this winter and spring, they have had persistent problems sticking to
any production agreements in recent years.
The new deal was reached in an informal but hugely important closed-door session
involving delegations from all OPEC members.
Immediately after it was over, oil ministers were tight-lipped about what they had done.
''It's going very well - I have no other comments,'' Libyan oil minister Abdalla Salem
el-Badri said as he emerged from the talks held in a fancy Vienna hotel.
Saudi Oil Minister Ali Naimi told reporters he was ''very happy'' with the deal, although
he would not provide any immediate details.
Going into today's session, six of the 11 OPEC members had pledged to cut a total of
620,000 barrels daily from the market - and now OPEC appears to have more than
doubled that promise. Non-OPEC producers Mexico, Russia, Egypt and Oman had
also pledged to cut another 203,000 barrels.
Crude oil is the world's most vital commodity and the recent cheap prices have been a
bargain for consumers but a nightmare for OPEC and other producers.
OPEC found itself in a mess this winter after boosting output just as the Asian
economic crisis started eroding the growth in world oil demand.
The oil ministers held an emergency meeting in March, agreeing to cut 1.245 million
barrels of daily production. They delivered most, but not all, of those cuts and prices
plunged further, leading to the latest effort to restrain production further.
Members of the Organization of the Petroleum Exporting Countries are Algeria,
Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab
Emirates and Venezuela. |
