VIENNA, 25 September 2003 — Defying most expectations, OPEC plans to cut its oil production target by 3.5 percent beginning in November, several oil ministers said yesterday.
The Organization of Petroleum Exporting Countries still must approve the cut, which would reduce the group’s output ceiling by 900,000 barrels a day to 24.5 million barrels. OPEC pumps about a third of the world’s crude. Kuwaiti Oil Minister Sheikh Ahmad Fahad Al-Ahmad Al-Sabah announced the planned reduction after the 11-member group broke up for lunch following informal talks at OPEC headquarters in Vienna.
Oil ministers from Iran and the United Arab Emirates confirmed the plan when the group’s representatives returned and prepared to meet in private to ratify their decision. “OPEC will cut 900,000 barrels a day from Nov. 1,” Sheikh Al-Sabah said.
The group is taking pre-emptive action now to try to keep prices stable before an expected dip in seasonal demand early next year.
OPEC predicts that the daily supply of crude will outstrip demand by 2.5 million barrels during the first quarter of 2004.
Iranian Oil Minister Bijan Namdar Zanganeh called the cut a possible “first step” and did not rule out an additional reduction later in the year.
“It is better that we start before we witness a very bad situation in the market,” he said.
OPEC had been widely expected to keep its daily production ceiling at 25.4 million barrels.
However, a recent slide in prices and OPEC’s expectations of a surge in oil inventories among major importing countries have compounded its fears about a further softening of the market.
Iraq’s gradual return to the market was also a factor. Zanganeh noted that a cut of 900,000 barrels would return OPEC’s output target to what it was before the war in Iraq removed that country temporarily from the market.
Iraq, a founding member of OPEC, participated in its policy discussions for the first time since the ouster of former Iraqi President Saddam Hussein.
Iraq’s newly installed Oil Minister Ibrahim Bahr Al-Uloom took his place between counterparts from Kuwait and Iran at the U-shaped table in the OPEC secretariat.
