VIENNA, April 24: Trying to keep oil prices from collapsing after the end of the Iraq war, Opec said on Thursday it would cut its output by two million barrels a day from June and might even reduce production further.
The cut in Opec’s current production level of 27.4 million bpd to 25.4 million bpd as of June 1 effectively creates a new quota for the Organization of Petroleum Exporting Countries of 25.4 million bpd, Qatar Oil Minister and Opec President Abdullah bin Hamad al-Attiyah told a news conference after the cartel’s one-day meeting in Vienna.
The new output level was an increase over the current quota of 24.5m bpd, which Opec states have not respected as they flooded the market with oil to keep prices under control when the Iraq war loomed earlier this year.
Al-Attiyah said Opec was trying to be “pragmatic” in its handling of the world oil market.
Oil prices fell to a five-month low in London after Opec’s decision to cut output.
The price of benchmark Brent North Sea crude oil for June delivery fell 66 cents per barrel to $23.60 in late trading in the wake of the announcement, the lowest level since mid-Nov.
“I would have thought that the fact that they are cutting output by two million bpd was bullish, but at the moment the market is not taking the news as positive,” said Prudential Bache analyst Christopher Bellew, pointing to confusion over the Opec move.
Al-Attiyah said he hoped the cut would be enough to keep oil prices from falling below $22 a barrel, the bottom of the Opec target range of $22-28 per barrel.
Iraq is now assumed to be producing zero oil, according to production figures for April, and the reduction is to be carried out by the 10 other Opec states, Al-Attiyah said.—AFP
VIENNA, April 24: Trying to keep oil prices from collapsing after the end of the Iraq war, Opec said on Thursday it would cut its output by two million barrels a day from June and might even reduce production further.
