OPEC agrees to slash output by two million barrels

December 18th, 2008 - 12:39 am ICT by IANS  

Paris/Oran (Algeria), Dec 17 (DPA) Members of the Organisation of the Petroleum Exporting Countries (OPEC), meeting at an extraordinary conference in the Algerian city of Oran, agreed Wednesday to cut oil production by two million barrels per day, BFM television reported.If the report is officially confirmed at the end of the conference, it would represent the largest single production cut taken by the group since 1982.

OPEC currently produces 27.3 million barrels of crude oil every day, or about 40 percent of the world’s production.

With global oil demand falling this year for the first time since 1983, OPEC President Chakib Khelil had said Tuesday that the group had reached consensus that a drastic production cut was necessary to shore up the price of oil.

As a result of the global economic slump, the price of a barrel of crude oil has fallen by some 70 percent in five months.

On Tuesday, OPEC said oil consumption was expected to fall to 85.68 million barrels per day in 2009, a year-on-year decrease of 0.18 percent.

On Tuesday, Saudi Arabian Oil Minister Ali al-Nuaimi had called for a production cut on the order of two million barrels per day.

“Supply is still somewhat in excess” of demand, al-Nuaimi said. “Inventories are also higher than normal. To bring things in balance there will have to be a cut of about two million barrels.”

Algerian President Abdelaziz Bouteflika opened the Oran meeting by urging participants to take a decision that will stabilize the oil market.

“The maturity of OPEC leaves me confident that all the decisions it will take in that direction will take into account their implication for the global economy,” Bouteflika said.

The conference was also attended by a number of non-OPEC oil-producing states, such as Russia, Syria, Azerbaijan and Oman, who areexpected to announce cuts of their own totalling about 600,000 barrels per day to reinforce the OPEC move and send a strong signal to the markets.

Igor Sechin, Russia’s deputy prime minister for energy, was quoted by news agency Interfax as saying Wednesday that Russia would move if the price of crude oil remains depressed.

“If the current price for oil on the world markets endures, the Russian oil industry will be compelled next year to lower the volume of its deliveries by 16 million tons, or 320 thousand barrels per day. And also to reduce the volume of investments, which could lead in the near future to more a radical production cuts,” Sechin said.

Early Wednesday, the price in New York of a barrel of light sweet crude was up 3.19 per cent, to 44.99 dollars, in anticipation of a significant OPEC production cut. In July, a barrel of oil cost 147 dollars.

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