November 24, 2001	Saturday	Ramazan 8, 1422

LONDON, Nov 23: The price of oil lurched lower on Friday after Russia announced a minuscule cut in output that fell far short of the demands of rival producers, who want deep cuts in supply to prop up prices.

Moscow’s offer to cut just 50,000 barrels a day from current production of more than seven million barrels amounts to just a dribble in the flood of crude that has swamped global markets in recent months, driving prices down more than 25 per cent.

London Brent reference crude for January delivery slid 88 cents to 19.02 dollars a barrel, as the market showed its disappointment at the Russian drop-in-the-ocean move.

Russia is digging its heels in, said Andrew Hartree, an oil expert with Royal Bank of Scotland. The price is down a dollar. This is crazy. It’s a great big game of chicken, and cat and mouse.

Oil prices have rallied in recent days from a low of 16.65 dollars plumbed on Monday, as the world’s top crude producers appeared to be close to a grand alliance that would have cut global supply by two million barrels a day from January 1.

The idea is to reduce supply in line with falling demand, which has been squeezed by the global economic slowdown.

The Organization of Petroleum Exporting Countries (Opec) is promising to trim daily output by 1.5 million barrels — but only if rivals outside the 11-nation cartel cut by a total of 500,000 barrels.

After Mexico promised a 100,000-barrel cut and Norway up to 200,000, the onus was on Russia second only to Saudi Arabia in oil production to come up with a six-figure cut at the very least.

But a meeting of government ministers and oil barons in Moscow yielded paltry results. Deputy Prime Minister Viktor Khristenko did promise a further decision on export cuts for the start of 2002, but the production cut announced was little more than an earlier 30,000-bpd offer that OPEC dismissed as derisory.

It’s not nearly enough, said an Opec source in Vienna on Friday of the latest offer. We should continue putting more pressure on the Russians.

Maybe we underestimated the Russians, he added.

Opec is now planning a new charm offensive by sending its secretary general, Ali Rodriguez, to Moscow next month to try and wrest more sacrifices from Russia.

Moscow is generally believed to hold most of the aces in its game of crude poker with Opec, because its budget will still add up if prices fall as low as 12 dollars a barrel, according to most analysts.

But many oil experts said that Friday’s snub was probably just the latest exchange in what would be a protracted bout of negotiations between world oil powers over output.

Just because they (the Russians) can get by at $13 a barrel doesn’t mean they want to, said Hartree. Every dollar (a barrel) is worth a billion bucks or something to them. You don’t throw that sort of money away just because you want to stick your fingers up at someone else.—AFP