International oil prices continued their fall this week despite OPEC'S decision to reduce output in order to reactivate a higher price of crude.
OPEC'S ministers agreed on March 17 to cut production by one million barrels a day. The measure is to be implemented April 1, but member countries had hoped that the announcement itself would have a price-boosting effect.
The OPEC decision, however, proved insufficient to halt a new decline, which was evident among fossil fuel benchmark prices for the week ending today.
Venezuela's Ali Rodriguez, secretary-general of OPEC, stressed on March 21 while in India that the oil organization could well pursue further cuts in production if prices do not show signs of recovering to within $22 to $28 per 159-liter barrel.
"If it is necessary to make cuts again, we will make cuts again," asserted Rodriguez. At the cartel's next ministerial meeting, slated for June at its Vienna headquarters, members will assess the performance of prices and make the appropriate decisions as far as production, he said.
The decision to reduce output by one million barrels comes on top of the 1.5-million-barrel reduction that took effect in February, which failed to provide the desired effect on prices.
Venezuela's Energy Ministry of Venezuela confirmed today that the OPEC basket of seven cruds fell 80 cents this week from last week's prices, closing at $23.10 per barrel.
The U.S. WTI , dropped 70 cents since last week, to sell today at $26.51 a barrel. The Brent suffered the sharpest decline -- $1.08 -- to close the week at $23.31 a barrel.
A drop in demand for oil is expected with the end of winter in countries of the industrialized North, and as a result of the economic deceleration in both the United States and Japan.
"We estimate a fall in demand of two million barrels daily beginning in the second quarter of this year," said Rodriguez, who believes "there is a considerable over-supply on the international petroleum market. "according to a report by ITS.
Over-supply and speculation are factors that contributed to pushing prices downward, agree officials from oil exporting nations.
According to ITS, another factor that could have had a role in the continued decline -- which occurred despite the announced OPEC production cuts -- was that President George W. Bush spoke out in favor of reducing his country's dependence on foreign oil.
Bush's statements are part of a plan to boost oil production within the United States, including in areas in Alaska, such as the Arctic National Wildlife Refuge, that are protected by law, wrote ITS
"Our (energy) demand is growing, but our supply is not," stated Bush, who like his father, George Bush, Sr., has personal financial interests in the petroleum industry, largely in the state of Texas.
OPEC decision to reduce oil production for the world market received strong support from oil exporting nations that are not members of the cartel, notably Angola, Mexico, Oman and Russia.
OPEC, made up of Algeria, Indonesia, Iraq, Iran, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela, last year established a price band of $22 to $28 per barrel as a balance that "benefits consumers and producers alike."
The organization currently places 25.2 million barrels on the market each day, 35 percent of the world total, though the portion does not include Iraqi oil, as that country is subject to the embargo imposed by the United Nations in 1990 in response to the Iraq's invasion of Kuwait.
© 2001 Mena Report (www.menareport.com)