PARIS, 12 October 2006 — The 11 members of the OPEC oil group have agreed to slash output by a million barrels a day, the OPEC president said yesterday, in a move aimed at shoring up sliding world crude prices.
“Our position to cut one million bpd (barrels per day) has received consensus. All members have agreed” on the figure, Nigerian Oil Minister Edmund Daukoru told AFP, adding that the cut would go into effect next month.
However, the OPEC secretariat in Vienna, questioned by AFP, could not immediately confirm that an accord had been struck.
OPEC spokesman Tareq Amin said there was “nothing new” to signal and that ministers were still in consultations.
Oil markets reacted cautiously to the news, with prices of light sweet crude for November delivery rising eight cents to $58.60 a barrel in New York.
In London Brent North Sea crude for November delivery slid 28 cents to $59.06 a barrel. Daukoru told AFP in Lagos that OPEC members, whose agreed upon production ceiling is currently 28 million barrels a day, could decide on the exact breakdown for the reduction later yesterday.
“I hope that by the end of today we will get a consensus on the distribution,” he said.
Daukoru had proposed the cut in a letter to his ministerial counterparts on Sunday.
In Doha, Energy Minister Sheikh Abdullah bin Hamad Al-Attiyah said the Gulf emirate backed the one-million-barrel-a-day reduction.
Earlier yesterday a source close to the OPEC chief, asking not to be named, had said the Organization of Petroleum Exporting Countries would not convene an emergency meeting to endorse a production cut.
Any action to reduce daily production by one million barrels would “not be an ‘OPEC decision’ as such” but a “voluntary decision by each member.”
The oil market has been waiting more than two weeks for a clear signal from OPEC in reaction to a 25 percent plunge in crude prices in the last two months. Until now, market participants have been confronted with contradictory statements from one OPEC member or another or individual decisions to reduce output by Nigeria and Venezuela.
Analysts said market reaction would likely reflect a realization that many OPEC members are already producing under their assigned quotas.
As a result, many traders are skeptic about reports of an actual cut in output.
OPEC countries, apart from Iraq which is not included in the quota system, are currently turning out an estimated 27.5 million barrels a day, according to analysts at Barclay’s Capital. A decrease to an overall quota of 27 million barrels a day would in effect mean a real reduction of only 500,000 barrels a day.
In its monthly report released yesterday, the Paris-based International Energy Agency estimated that OPEC had already lowered output in September to 27.8 million barrels a day, or 29.8 million including Iraq, and said the group’s individual quotas have largely been ignored for several months.
