OPEC likely to cut oil flow to prop price

greenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

OPEC likely to cut oil flow to prop price

The Organisation of Petroleum Exporting Countries (OPEC) may reduce oil production by as much as 4.3 per cent, or a million barrels a day, to combat a month-long drop in prices, the group's secretary-general said.

Oil ministers from the 11 nation group are in constant contact on the move, and among options is a supply cut of between 700,000 and 1 million barrels a day, Ali Rodriguez said in a telephone interview from the group's headquarters in Vienna.

"This is a possibility, but the ministers are in consultations to analyse very carefully the situation," he said. "In these times, we have to be very, very prudent before taking a decision."

Oil shares such as BP and Royal Dutch Petroleum rallied more than 1 per cent after the remark. On Monday, Mr Rodriguez had said that OPEC would not lower oil production as it assessed the effect on prices of US-led military strikes on Afghanistan. Prices since then are little changed, and other OPEC officials have indicated reductions may be coming.

Crude oil in London recently traded at $US21.85 ($43.57) a barrel, down 3c. Shares of BP Plc rose as much as 9.5 pence ($2.70), or 1.7 per cent, to 578p in London, while Royal Dutch advanced as much as 1.53 euros ($2.72), or 2.8 per cent, to 57.25 in Amsterdam.

OPEC is considering whether to lower oil output after the group's oil benchmark stayed below the target of $US22 to $US28 a barrel for 10 consecutive trading days.

Members have an agreement to consider a reduction once that threshold has been passed. Monday's price of $US19.75 marked the 11th day below the barrier.

OPEC's 11 members pump about two-fifths of the world's oil. The group, except Iraq, has a production quota of 23.2 million barrels a day.



-- Martin Thompson (mthom1927@aol.com), October 10, 2001


OPEC and any country which hosts their meetings needs to be hauled in to court on the grounds of price fixing!

-- Steve McClendon (ke6bjd@yahoo.com), October 10, 2001.

OPEC doesn't set the price. They are the producers. They can control the production (to some extent). The BUYERS set the price.

-- jamesjfitz (jamesjfitz@juno.com), October 10, 2001.

Moderation questions? read the FAQ