Saudi Arabia announces OPEC will cut oil output
OPEC countries will decide on a cut in output to ensure a balance between supply and demand, Saudi Arabia announced Monday after talks with Mexico and Venezuela.
"OPEC (the Organisation of Petroleum Exporting Countries) will decide on a reduction in its production in a way that will keep the price of crude at its targeted level of $25 a barrel and guarantee a balance between supply and demand," said Saudi Oil Minister Ali al-Nuaimi.
He was speaking after a meeting with his Mexican and Venezuelan counterparts, Ernesto Martens and Alvaro Silva Calderon.
The next OPEC cut would "take into account current stock levels and those expected over the coming months." Saudi Arabia and Venezuela are influential members within OPEC, which is due to hold a ministerial meeting Friday in Vienna to announce a cut in production by the cartel, which is being called for by member states. Mexico is not an OPEC member.
In London, the price of crude briefly fell below $26 a barrel Monday for the first time since March 2, before picking up towards day's end, as the market betted on a likely cut in OPEC output.
On Saturday, OPEC president Algerian Energy Minister Chakib Khelil raised the prospect of another production cut to this end, but did not specify the volume.
And Iranian Oil Minister Bijan Namdar-Zanganeh warned Sunday. "If OPEC does not cut back its production at Friday's meeting, the excess production on the market will cause prices to plunge."
Kuwait's Foreign Minister Sheikh Sabah al-Ahmad al-Sabah said his country would support any agreement reached by OPEC to cut production. But he too declined to give a figure.
The Middle East Economic Survey (MEES) reported that the 10 OPEC countries in the cartel's output quota system overproduced at a rate of 450,000 bpd in February.
The extra supplies came mainly from Iran which pumped 192,000 bpd over its new quota of 3.698 million bpd, said the industry newsletter.
The Nicosia-based publication predicted that OPEC would decide on fresh cuts to take into account both its members' non-compliance with the last reductions and Iraq's gradual increase in production.
Independent producers Norway and Mexico, "both participants in OPEC-led production restraint initiated in 1998 to revive flagging oil prices, have declared that further production cuts are not justified," it noted.—AFP.
©--Agence France Presse 2001.
© 2001 Mena Report (www.menareport.com)