12-03-99 Major oil-producing nations pledged to slash production in an effort to relieve the world-wide glut of oil that has depressed prices for months.
OPEC members, except Iraq, reached agreement with two non-OPEC exporters to reduce overall production by 2 mm bpd. The news sent crude oil prices to five-month highs on commodity markets, before dropping back slightly on profit-taking.
After years of seeing OPEC promise cuts only to cheat on quotas, traders are optimistic that these cuts may stick because producing countries can't afford to let prices fall further. But some analysts remained wary that members of the dysfunctional OPEC family may renege on the pledge in fear of losing oil income.

OPEC members Saudi Arabia, Iran, Algeria and Venezuela, together with non-member Mexico, thrashed out the production-cut agreement during two days of meetings in the Netherlands. The deal must be formally approved at a March 23 meeting of the OPEC in Vienna.
Saudi Oil Minister Ali Naimi said non-OPECmembers Mexico and Oman have also committed to the cuts, and discussions are under way with other non-OPEC countries.
The cuts, effective April 1, amount to 2 mm bpd and would be added to existing OPEC and non-OPEC cuts of 3.1 mm bpd agreed upon last June, he said.
"Any higher than this and I think it would have got into the range of implausible. This is about the maximum people can stomach," said an analyst in London.

Algerian Oil Minister Youcef Yousfi, who is also OPEC president, said a more precise figure and a breakdown of the cuts would be given at the March 23 meeting.
Oil prices have been rising in recent days as traders grew optimistic that some cutbacks would be announced before the OPEC meeting.
The rally has pushed oil prices up 35 % from December's 12-year lows.
Analysts estimated that crude prices could rise to $ 16 to $ 20 per barrel by year's end if oil producers adhere to the cutbacks.
James Van Alen, an analyst with Janney Montgomery Scott in Philadelphia, said themarket is more willing to believe that the cuts will stick because producers have been suffering so long from depressed prices. "What you're seeing is that they're a little more scared," Van Alen said.
Also raising optimism was a pledge last month by the president of Venezuela -- seen as one of the largest overproducers -- to comply with the previously announced cutbacks.

One of the major obstacles to a new agreement had been the issue of Iran's production. Iran has insisted that any cuts be made from a base production level of 3.925 mm bpd, while other oil producers claim that figure should actually be 3.623 mm bpd.
The oil ministers declined comment on the issue, but consultations between Saudi Arabia and Iran and also between Gulf Co-operation Council members appear to have broken the stalemate.
OPEC members are Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.