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Business

Cartel looks set to reduce output

Latest update : 2009-03-15

OPEC members, meeting in Austria, appear set this weekend to trim output to energise weak oil prices. The International Energy Agency (IEA) - which represents oil consumers - has warned a further output would accelerate the global economic crisis.

AFP - OPEC meets here Sunday for a pivotal production meeting that could cut crude output to defend slumping oil prices which have collapsed in the face of a fierce global economic downturn.
  
The spreading worldwide recession has ravaged energy demand and dragged oil prices far below the record highs above 147 dollars per barrel that were forged last July. In turn, that has slashed OPEC's precious revenues.
  
"The world economy is not as healthy as it should (be), so we should expect demand worldwide to be down," said Oil Minister Ali Ibrahim al-Nuaimi of influential OPEC kingpin Saudi Arabia on Saturday.
  
The Organization of Petroleum Exporting Countries, which pumps 40 percent of the world's crude supplies, will hold a regular production meeting in the Austrian capital where the cartel is headquartered.
  
Algeria has called explicitly for OPEC to slash output to energise weak oil prices, which have been slammed by weak demand arising from the global economic downturn.
  
OPEC was also widely tipped to increase the pressure on its members to comply with last year's steep production cuts.
  
The cartel has already slashed its output three times since September as it sought to breathe new life into battered oil prices.
  
Asked by reporters about whether he wanted OPEC to cut production, Algerian energy minister and former OPEC president Chakib Khelil replied: "Yes we would like to."
  
Questioned about whether he would favour an output cut or full compliance among OPEC nations with previous cuts agreed last year, he responded: "Both."
  
Nuaimi also said that there was an 80-percent compliance level with the cuts agreed late last year to reduce output by a total of 4.2 million barrels per day.
  
That means that OPEC has yet to remove 20 percent of the cuts -- or 800,000 barrels per day of production -- from the market. Venezuela had called Friday for "100 percent" compliance.
  
When asked on Saturday if there will be another cut, Nuaimi replied: "We will tell you tomorrow."
  
Saudi Arabia has previously stated that it regards 75 dollars per barrel as a "fair price" for crude -- but oil prices remain far below this level.
  
OPEC's official daily output quota currently stands at 24.84 million barrels after the last gathering in December in Oran, Algeria.
  
Iraq also pointed Saturday towards a production cut -- but the country is not part of OPEC's quota system owing to persistent unrest.

Date created : 2009-03-15

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