VIENNA, Nov 14: The Opec oil cartel met on Wednesday to agree a deep output cut to rescue prices from a post-September 11 slump, but admitted its action might have little impact without support from key non-Opec producers.
Some ministers even warned they would not back an Opec cut without support from their non-Opec rivals, but most say the 11-member cartel has little choice but to agree a cut of between 1-1.5 million barrels per day (bpd).
Saudi Arabian oil minister Ali al-Nuaimi, the cartel’s kingpin, singled out Russia, a leading producer, for criticism, saying he was disappointed at its token 30,000 barrels a day cut announced on Monday.
Thirty thousand barrels out of seven million, that disappoints anybody. The Russians know that, he told journalists, referring to Russia’s total oil production capacity. Their cooperation is very very important.
Opec, which produces 40 per cent of the world’s crude, is widely expected to cut its production by at least 1 million bpd, its fourth reduction this year. A final decision on the exact amount was expected Wednesday afternoon.
But several ministers are uneasy about turning down the taps again when other independent crude producers such as Mexico, Norway and Russia are showing no signs of following suit.
Going into an informal meeting in a Vienna hotel on Wednesday morning, before their formal session later in the day, they warned of a price war if non-Opec countries did not come on board.
The oil market is under a lot of pressure. The position of non-Opec is not clear, and I think we should not push eachother into a price war, said Qatari oil minister Abdullah al-Attiyah, adding: Then everyone will be the loser.
Opec has already cut output by more than 13 per cent this year, and the fear is that instead of rescuing prices, the Opec cutback would be usurped by non-Opec countries eager to pump their volumes to boost market share.
Opec is being forced to act because crude prices have tumbled around 25 per cent since the September 11, attacks on the United States. Prices fell last week to two-year low points, eating into revenues of Opec countries, many of which rely heavily on oil exports.
But while welcoming that move, Opec ministers recognise that the market will remain under pressure for the foreseeable future because the current global slowdown is sapping demand for crude and oil-based products.
Al-Nuaimi, the most influential minister within Opec, said Tuesday that Opec should cut by around 1.5 million barrels a day, with non-Opec providing 500,000 barrels a day.
On Wednesday he also reminded non-Opec countries of previous oil crisis when crude prices collapsed to below $10 a barrel, two years ago and in the mid-1980s.—AFP
