OPEC eyes output cut of up to one million barrels per day
OPEC is considering an output cut of between 750,000 and one million barrels per day (bpd) to prop up prices, Middle East Economic Survey (MEES) reported in its latest edition.
The Cyprus-based industry newsletter, in its July 23 edition, said a decision on whether to hike output was to be taken either at an extraordinary meeting in Vienna or by conference call.
"A production cut of between 750,000 and one million bpd is being discussed seriously. Exactly how much remains to be decided," said MEES.
"A decision is to be taken this week, especially if prices continue to fall and the OPEC basket price remains around the $22 a barrel mark," the newsletter said.
Some OPEC members are also calling for "more credible OPEC discipline", it said, estimating the combined output of cartel members minus Iraq averaged around 24.99 million bpd in June, almost 790,000 bpd above the OPEC quotas.
A source close to OPEC's current president, Algerian Energy Minister Chakib Khelil, said Thursday that the cartel could cut production by one million bpd at a meeting in Vienna.
The next day, oil prices bounced off six-month low points as traders drifted back into the market amid talk of the possible cut by OPEC exporters.
Reference Brent North Sea crude for September delivery rose to $24.41 a barrel from $24.05 on Thursday evening—the lowest closing price of the year so far.
And OPEC kingpin Saudi Arabia said it was anticipating an output cut because of a "crisis" in demand, which is believed to be dropping sharply as the global economic downturn bites.
"All sources of information are leading us to believe we are heading to a crisis, that demand is diminishing, that supply is excessive and therefore if OPEC needs to maintain its (price) band, then it should take drastic action to cut production," said Saudi Oil Minister Ali al-Nuaimi.
"Now, we're ready to do so, but we want to be sure that when we do that, that we do not create another crisis," Nuaimi told reporters in Bonn Friday.
The basket price of seven crudes worldwide clawed back on Thursday to $22.78, from $22.64 the previous day, OPEC's official news agency reported. –(AFP)
© Agence France Presse
© 2001 Mena Report (www.menareport.com)