OPEC slashes oil production

WebPosted Wed Jan 17 10:30:02 2001 VIENNA-- OPEC, the organization of oil producing countries, is cutting production by five per cent to keep oil prices from dropping. But some believe the move will lead to even higher gas prices.

The members of the oil cartel met in Vienna on Wednesday and cut a deal to reduce production by 1.5 million barrels of oil a day, starting on Feb. 1.

OPEC says cutting production will actually keep prices stable because of a drop in demand for oil.

But major importing countries fear the move will pose problems for slowing economies in the West.

Both the United States and the European Union had asked that the cut in output be more modest, because they were concerned about a jump in prices.

Analysts predict OPEC's cuts should have little effect on motorists filling up at the pump – prices shouldn't move much in either direction.

But no one knows what effect, if any, the expected slowdown in the U.S. economy will have. It could prompt reduced demand for oil around the world.

OPEC is planning another meeting in March to make any corrections needed to compensate for that.

Former holdout countries including Qatar and Iran were said to have agreed with the Saudi proposal to try to protect their profits, especially once warm weather returns. In the summer, the drop in demand for oil is normally about two million barrels a day.

OPEC wants to defend the value of its crude near $25 a barrel. Prices had fallen from a 10-year high of $35 in October.

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-- Martin Thompson (mthom1927@aol.com), January 17, 2001