The oil producers’ cartel Opec has approved plans to cut crude output by 1.2 mln barrels per day. The cut, agreed at a meeting in Qatar, sets production at 26.3 mln barrels per day from 1 November.
The 4.4 percent reduction starting Nov. 1 will be based on how much members were pumping last month, rather than quotas, United Arab Emirates Oil Minister Mohamed al-Hamli, who will become president of the Organization of Petroleum Exporting Countries in 2007, said after members met in Doha, Qatar.
Rising U.S. inventories, a calm Atlantic storm season and reduced tension over Iran’s nuclear program slashed oil futures by 25 percent from the record, to $58.86 a barrel in recent trading. The slide prompted concern among OPEC members that the boon of an unprecedented rally is poised to end. The group is defending a price more than double its target two years ago.
It is the first time the 11-nation organisation has agreed on a group-wide production cut in more than two years.
Opec is trying to shore up global crude prices, which have fallen 20% since they hit record highs of $78 a barrel during the conflict in Lebanon in July.
Both US light crude and Brent were trading below $60 a barrel on Thursday. The reduction will affect all member nations except Iraq, officials said.
Crude prices have been extremely volatile this year as geopolitical tensions and production problems have impacted on the market.
Analysts have said they do not expect oil prices to surge back near record levels in the near future, as more oil production is coming on-line.
However, the analysts have been careful to qualify their comments, warning that many of the main oil producing nations are in unstable regions and any problems could lead to a large price spike.
They also said there may be further production cuts later this year.
The biggest reduction among members with quotas will be made by Saudi Arabia at 380,000 barrels a day, OPEC said in a statement. The smallest will be 35,000 barrels a day by Qatar.
OPEC may need to cut an additional 500,000 barrels a day when the group meets Dec. 14 in Abuja, Nigeria, Venezuelan Oil Minister Rafael Ramirez said.
Venezuelan Energy and Mines Minister Rafael Ramirez said a further cut of 500,000 barrels might be necessary then, Reuters news agency reported. Opec is next due to meet in December in
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