OPEC agrees to cut overproduction
OPEC agreed to cut worldwide oil production but also to raise official quotas for the 11-nation cartel to bring them
into line with actual production, OPEC President Rilwanu Lukman said.
"First we agreed to cut overproduction. Second we agreed to raise the official ceiling by 1.3 mm bpd," Lukman said after an informal meeting in Vienna of OPEC ministers ahead of a formal plenary session.
The current OPEC quota is 21.7 mm bpd, with production overshooting the mark by 2.5 to 3.0 mm bpd as members treat
the limits as informal rather than iron-clad barriers. The new quota on total output will be 23 mm bpd.
Kuwaiti Oil Minister Ahmed Fahd Al-Sabah said the move would take 1.5 to 1.7 mm barrels "off the market." Qatar minister Abdullah bin Hamad Al Attiyah added that he was "confident all (OPEC) members will respect" the new norms. Lukman said OPEC wanted oil prices to stay in the range of $ 22-$ 28 a barrel.
Saudi minister Ali al-Naimi said the new limits would stay in place "as long as the price is good."
In London, the price of Brent North Sea crude for January delivery fell 12 cents to $ 26.30. In 1998 crude prices had
dropped below $ 20, and in March 1999 the benchmark Brent fell below $ 10.
The oil market is awash with crude, with OPEC looking towards the first quarter of 2003 -- a time when traders demand less oil as they are buying supplies for spring and summer in the northern hemisphere, when oil consumption is lower.
OPEC heavyweight Saudi Arabia had proposed lowering production by raising quotas while at the same time ensuring
output comes down to the new quota levels. Saudi Arabia is the world's largest oil producer with output of more than
7 mm bpd.
Algeria, Nigeria and Venezuela had called for separate increases in their production quotas. But the new quotas will be determined pro-rata for the OPEC members, Lukman said.