Opec to cut output 4pc to up prices
Afp, Hong Kong
The Opec cartel has agreed informally to cut oil output by one million barrels a day or 4.0 percent in order to bolster prices which have fallen some 25 percent from record levels in July, the Financial Times reported Thursday. The newspaper said the majority of the 11-member Organisation of Oil Exporting Countries back a voluntary reduction and the deal could be ratified as early as a mid-December meeting in the Nigerian capital of Abuja. An unnamed Opec official said in the report that the group "is going to defend a price floor for its oil of 50-55 dollars a barrel." The price of Opec's reference crude oil on Wednesday was 55.27 dollars. The benchmark US light crude contract for November was quoted at above 60 dollars in early Asian trade, recovering from sharp overnight losses. The Financial Times said Saudi Arabia, the world's top producer and Opec's most important member, is unhappy with the move towards voluntary cuts even though it has quietly cut its output by 200,000 bpd over the past two months. It noted that Kuwait on Wednesday became the first Gulf state to herald production cuts after Nigeria and Venezuela announced on Friday that they would reduce output by a total of 170,000 bpd. "We are currently in negotiations with fellow Opec members. Matters have been left that these voluntary reductions undertaken by some Opec countries will calm the markets, at least for the current period," Sheikh Ali al Jarrah al Sabah, Kuwait's energy minister, said in the report. The newspaper, citing Opec insiders, said Kuwait, Iran, Venezuela, Nigeria and Libya had informally agreed to voluntary cuts and the United Arab Emirates had said it was likely to join in. The discussion on cutting output comes amid concerns that once through the northern hemisphere winter, the second quarter of 2007 could see a sizeable glut unless production is reduced well in advance, it said. Another report from Abuja adds: Opec President, Nigeria's oil Minister Edmund Daukoru said Thursday, the international oil cartel might hold an emergency meeting on whether to cut output or not. "We are toying with the possibility of having an emergency meeting," Daukoru told AFP, dismissing suggestions that the organisation had already reduced its daily output of 28 million barrels by one million.
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