OPEC agrees to cut oil output

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(Xinhua)
Updated: 2008-10-24 19:57

VIENNA -- The Organization of the Petroleum Exporting Countries (OPEC) agreed here on Friday to cut oil output by 1.5 million barrels a day.

A car passes a petrol station in front of the OPEC headquarters in Vienna October 24, 2008. An emergency OPEC meeting on Friday reached swift agreement to chop production by 1.5 million barrels oil per day (bpd) as a first step toward halting a deep oil price slide. [Agencies]

OPEC made the decision at an urgent meeting here Friday in the OPEC headquarters, which is aimed at addressing the slide of oil prices over past months.

"The Conference has decided to decrease the current OPEC-11 production ceiling of 28.808 million barrels a day by 1.5 million barrels a day, effective 1 November 2008," said a resolution passed at the one-day meeting.

OPEC also reached consensus on the distribution of an overall output cut among the 13 OPEC members, which is effective as of next month.

Saudi Arabia, the biggest oil exporter in the world, will reduce its daily output by 466,000 barrels, the biggest cut among the OPEC members.

Iran, the United Arab Emirates, Kuwait, Venezuela and Nigeria also agreed to cut their daily production by over 100,000 barrels.

"There is over supply in the international market," OPEC conference president Chekib Khelil, who is also Energy Minister of Algeria, told a press conference after the meeting.

Khelil said high oil prices "is not a demand issue," noting that high oil prices were driven by speculations, "just like speculation has driven the price of dollar."

Khelil also cleared the doubts about the implementation of the output cut as Saudi Arabia openly opposed to the output cut ahead of the meeting. "We are very confident, because I don't think they have other choice," Khelil said.

OPEC, which produces around 40 percent of the world's oil, also urged non-OPEC oil exporters to contribute to efforts to restore prices to "reasonable levels," noting that "OPEC cannot be expected to bear alone the burden of restoring equilibrium" of oil supply and demand.

Khelil said OPEC had informed Russia, a big oil exporter outside OPEC, of its decision on output cut.

"They will contribute," said Khelil.

Over the past three months, oil price has seen a steep slide on the international market, partly triggered by global financial crisis.

On July 11, 2008, oil price hit a record high of US$147.27 per barrel, but it has plunged sharply thereafter.

Earlier on Thursday, the price of New York oil dived to a new 16-month low in choppy trade.

New York's main contract, light sweet crude for December delivery, sank as low as US$65.90 per barrel, which was last seen on June 13, 2007.