Oil Producers Detail Plan to Cut Oil Supply to Boost Prices
Oil Producers Detail Plan to Cut Oil Supply to Boost Prices
London, March 15 (Bloomberg) -- Oil producers released
details about a plan to cut world oil supply an additional 2.7
percent, the latest plans from the Organization of Petroleum
Exporting Countries to try to boost oil prices.
Norway said it would cut 100,000 barrels of oil a day, and
Qatar said it would reduce its output 47,000 barrels a day for a
year beginning April 1. The details emerged following a pact by
five nations Friday in which they said they'd cut more than 2
million barrels a day.
Most producers, including Saudi Arabia, Iran and Venezuela
haven't yet discussed the size of their planned cuts. Oil prices
in New York fell on skepticism the group would adhere to its
commitments, since OPEC to date has only removed three-quarters
of the 2.6 million barrels a day it has pledged to cut.
''There will be difficulties in getting the approval of all
OPEC countries on the new cuts,'' said Sheikh Ahmad Zaki Yamani,
former oil minister of Saudi Arabia. ''There has been poor
compliance to previous agreements.''
Benchmark West Texas Intermediate crude oil fell as much as
26 cents a barrel to $14.23 a barrel on the New York Mercantile
Exchange. The contract was unchanged at $14.49 in recent
trading, up 18 percent in the past two weeks on speculation cuts
were being planned.
After failing in November to agree to any measures to boost
oil prices, OPEC ministers meet again March 23 with the aim to
ratify cuts agreed by five top producers at a meeting in The
Hague last week.
Dent
Saudi Arabia, Venezuela, Iran, Algeria and Mexico said
after the meeting they'd make a 2 million barrel-a-day cut to
supply in addition to the 3.2 million barrels a day producing
nations agreed to reduce last year.
In all, the reductions would total about 5.2 million
barrels a day and would make a big dent in world oil supply of
about 75 million barrels a day. The new cuts would take affect
on April 1 and last for a year, Qatar said.
Brent oil prices today are little more than half their 1997
peak of $24.91 a barrel due in part to skepticism the producers
actually will make the cuts.
The five nations in The Hague last week declined to give
any details of the plan, saying it had yet to be ratified by the
full OPEC group. Until March 23, they plan no formal
confirmation of which nations agreed to cut how much.
Even so, details about the accord began to seep out over
the weekend. Kuwait announced on its official news service that
its cuts would total about 144,000 barrels of oil a day.
Saudi Arabia will cut 550,000 barrels a day, according to
the Middle East Economic Survey, an authoritative industry
newsletter. The Wall Street Journal said Iran would cut 200,000
barrels a day.
Iran
Iranian Oil Minister Bijan Namdar Zanganeh confirmed his
nation would cut its output but declined to give details until
the OPEC meeting, according to the nation's official Islamic
Republic News Agency.
The agreement will allow the ''resumption of development
projects which were postponed last year'' due to the sharp drop
in oil prices,'' Qatar's oil minister Abdullah bin Hamad al-
Attiyah said.
Yamani, the former Saudi minister, said oil prices would
rise above $15 a barrel of Brent crude if there is full
compliance to the new cuts.
OPEC's failure to make further output cuts at its last
meeting in November prompted oil prices to fall to a 12-year low
of $10.35 a barrel in New York the following month. A
combination of excess production, ample inventories and poor
demand for winter heating fuels pushed prices down.
Russia, which agreed to cut 80,000 barrels a day from its
output last year, still was undecided on whether to join in the
agreement this time.
''We'll specify our position later this week,'' said Oleg
Rumyantsev, spokesman for the Russian fuel and energy ministry.
''It's still difficult to say whether any cuts from our side
will follow.''
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Looks good, James. I wonder how soon we're going to the the shorts panic to cover their positions.
Mike
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