VIENNA: The Organization of Petroleum Exporting Countries (OPEC) said yesterday it will slash oil output by 1.5 million barrels a day from Nov. 1 as it seeks to shore up crude prices, triggering a verbal backlash from recession-threatened Britain and the United States.
“The decision was straightforward,” Minister of Petroleum and Mineral Resources Ali Al-Naimi said after the meeting. “OPEC will do whatever is necessary to balance oil markets,” he said.
Yet after OPEC agreed to reduce its official output quota to 27.3 million barrels per day, the price of Brent North Sea crude sank close to $61, the lowest point since March 2007. Crude futures in London and New York have plunged by almost 60 percent from record highs of above $147 a barrel reached only three months ago when supply concerns sent prices soaring.
The White House denounced what it called OPEC’s “anti-market” decision to cut production following the organization’s emergency meeting in Vienna yesterday, even though oil prices subsequently slumped to 17-month lows on fears of a global recession.
British Prime Minister Gordon Brown was left “disappointed” by OPEC’s output reduction and urged oil producers to show a responsible attitude in the current crisis, his spokesman said.
German Economy Minister Michel Glos, meanwhile, appealed to oil producing countries’ sense of “responsibility” to avoid pushing prices higher.
OPEC, which produces 40 percent of world crude, announced a cut in production in a bid to support crude prices which “have witnessed a dramatic collapse — unprecedented in speed and magnitude,” according to an official statement from the organization.
White House spokeswoman Dana Perino said the United States desired “markets to be well supplied.”
She added: “The high oil prices from the past year contributed to the slowdown in demand and the subsequent downturn in the economy, and we would ask that everyone keep that in mind.”
In London, Brown’s spokesman said “OPEC needs to consider the impact that the decision will have on the world economy.” He added it was important “that all decisions that are taken by the oil producers are designed to ensure there is long-term stability in the price of oil and transparency in pricing.”
Brown had angered OPEC nations ahead of the Vienna meeting by saying that a cut in production would be “scandalous.”
