OPEC moves to keep oil price above $100
Friday, 12 September 2008
VIENNA, Sept 11 (AFP): With oil prices falling below 100 dollars per barrel this week, oil producer group OPEC decided to cut production to prevent a further drop, despite an economic crisis in consumer countries.
"It looks like they are willing to defend 100 dollars (as a floor)," Mike Wittner, an analyst at Society Generale, commented following Tuesday's OPEC decision.
Oil prices topped a record 147 dollars in July but have since fallen some 30 per cent, dropping below the symbolic 100- dollar mark for the first time in five months on Tuesday, as the Organisation of Petroleum Exporting Countries was meeting in Vienna.
"The market was coming down very dramatically but I hope it will relax now," OPEC Secretary General Abdullah al Badri told journalists Wednesday after the cartel's 13 members agreed to cut excess production by 520,000 barrels per day (bpd). The White House expressed its disapproval of the decision Wednesday, with spokeswoman Dana Perino telling reporters: "We would like to see more oil on the market, not less."
The oil producers maintained their official output quotas at Tuesday's meeting, although the total figure dropped to 28.8 million barrels per day after Indonesia suspended its membership of the group.
But they also pledged to respect the quotas.
The cartel's members have been pumping far above their quotas, producing a surplus of 520,000 bpd, OPEC president and Algerian Energy Minister Chakib Khelil pointed out.
"The decision is significant, it took the market by surprise," Wittner said of the surplus cut.
"They expected a rollover," meaning there would be no change in production, he added of analysts' forecasts.
Influential Saudi Oil Minister Ali al-Nuaimi said the oil market was "fairly well balanced," on arriving in Vienna Tuesday, increasing speculation that production levels might remain unchanged.
Riyadh had hiked its oil output by a total 500,000 bpd in May and June in response to orders from customers.
In August, Saudi Arabia pumped 9.45 million bpd, far above its 8.94 million bpd quota, according to the International Energy Agency (IEA).
Wednesday's decision could thus be seen as a victory for OPEC's traditional price hawks, Iran and Venezuela, which had called for a surplus cut and strict compliance with official quotas.
"It looks like they are willing to defend 100 dollars (as a floor)," Mike Wittner, an analyst at Society Generale, commented following Tuesday's OPEC decision.
Oil prices topped a record 147 dollars in July but have since fallen some 30 per cent, dropping below the symbolic 100- dollar mark for the first time in five months on Tuesday, as the Organisation of Petroleum Exporting Countries was meeting in Vienna.
"The market was coming down very dramatically but I hope it will relax now," OPEC Secretary General Abdullah al Badri told journalists Wednesday after the cartel's 13 members agreed to cut excess production by 520,000 barrels per day (bpd). The White House expressed its disapproval of the decision Wednesday, with spokeswoman Dana Perino telling reporters: "We would like to see more oil on the market, not less."
The oil producers maintained their official output quotas at Tuesday's meeting, although the total figure dropped to 28.8 million barrels per day after Indonesia suspended its membership of the group.
But they also pledged to respect the quotas.
The cartel's members have been pumping far above their quotas, producing a surplus of 520,000 bpd, OPEC president and Algerian Energy Minister Chakib Khelil pointed out.
"The decision is significant, it took the market by surprise," Wittner said of the surplus cut.
"They expected a rollover," meaning there would be no change in production, he added of analysts' forecasts.
Influential Saudi Oil Minister Ali al-Nuaimi said the oil market was "fairly well balanced," on arriving in Vienna Tuesday, increasing speculation that production levels might remain unchanged.
Riyadh had hiked its oil output by a total 500,000 bpd in May and June in response to orders from customers.
In August, Saudi Arabia pumped 9.45 million bpd, far above its 8.94 million bpd quota, according to the International Energy Agency (IEA).
Wednesday's decision could thus be seen as a victory for OPEC's traditional price hawks, Iran and Venezuela, which had called for a surplus cut and strict compliance with official quotas.