Opec agrees to cut oil output in 40 days

Oil climbs on OPEC production cut
Wed, 10 Sep 2008 13:20:51 GMT
  Crude oil prices have slightly climbed from a five-month low after OPEC agreed to cut production by 520,000 barrels per day (bpd).

US crude went up 9 cents to stand at $103.35 a barrel on Wednesday. London Brent crude climbed 28 cents to $100.62, after falling below $100, for the first time since April, on Tuesday.  The Organization of Petroleum Exporting Countries (OPEC) formally agreed in a Tuesday summit to return to its 2007 production target of 28.8 million bpd.  OPEC Secretary-General Abdullah al-Badri said on Wednesday that the group's decision to adhere to production quotas meant that the 'huge oversupply' of oil would be reduced.... The rise in prices was minor as the International Energy Agency (IEA) in its monthly report lowered the 2008 world oil demand growth by 100,000 bpd due to weaker economic conditions and higher prices.  IEA also cut its forecast for 2009 global demand growth by 40,000 bpd to 890,000 bpd.  AKM/HGH  Sources at PressTV 

  Opec oil ministers have agreed to curb their collective output by more than 500,000 barrels a day. An Opec spokesman said members had agreed to cut excess production and "strictly comply" with a quota target of 28.8 million barrels per day. "Since the market is oversupplied the conference agreed to abide by September 2007 production allocations totalling 28.8 million barrels per day, levels with which member countries committed to strictly comply," an Opec statement said. Chakib Khelil, Opec's president and the Algerian energy minister, said that quota in effect meant that member countries agreed to cut back 520,000 barrels a day in overproduction. The cutback is expected to take effect in about 40 days, Khelil added.

The 13 members of the Organisation of the Petroleum Exporting Countries, which pumps 40 per cent of world oil, held late-night talks on Tuesday into early Wednesday in the Austrian capital, Vienna, before coming to their decision, which is likely to boost sagging crude prices.   The Opec statement identified a shift in sentiment in the oil market linked to falling economic growth, a strengthening dollar, easing geopolitical tensions and greater supply.

"All the foregoing indicates a shift in market sentiment causing downside risks to the global oil market outlook," it said.

Compromise: Wednesday's decision for mainly Saudi Arabia to cut excess production above quota would remove oil from the market but not amount to a formal change in policy. The move is a compromise meant to avoid new turmoil in oil markets while at the same time reflecting Opec attempts to prevent prices from falling too much. Saudi Arabia, the world's biggest crude oil producer which had come under fierce pressure in recent months from several countries, including the United States, to increase production to bring down record crude prices, had on Tuesday expressed satisfaction with recent steep falls in oil prices and indicated no signs of approving a cut in output by Opec.

"We have worked very hard since June's meeting to bring prices to where they are now. I think everything is in balance," Ali al-Nuaimi, Saudi Arabia's oil minister, had said ahead of the Opec meeting.

But Iran, Venezuela, Libya and Algeria had all raised worries about oversupplying the market.

Crude prices have dropped about 30 per cent since spiking to nearly $150 a barrel in July and sank below $100 for the first time in five months in London on Tuesday when Brent North Sea crude for delivery in October dropped to $99.04 in late trade.