OPEC expected to approve drastic cut in oil production
Members of the Organization of the Petroleum Exporting Countries (OPEC) are expected to approve a cut in oil production of up to 2 million barrels per day when they meet later Wednesday in the Algerian city of Oran, reported dpa.
With global oil demand falling this year for the first time since 1983, the 12-member cartel has already found consensus that a drastic production cut is necessary to shore up the price of oil, OPEC President Chakib Khelil said.
The price of a barrel of crude oil has fallen by some 70 per cent in five months because of the global economic slump.
However, Khelil admitted late Tuesday in Oran that "no agreement has been reached on the level of the cut," with proposals ranging from 1 million to 2.5 million barrels per day.
OPEC currently produces 27.3 million barrels of crude oil every day.
Saudi Arabian Oil Minister Ali al-Nuaimi said the cut should be on the order of 2 million barrels per day.
"Supply is still somewhat in excess" of demand, al-Nuaimi said. "Inventories are also higher than normal. To bring things in balance there will have to be a cut of about 2 million barrels."
According to a source close to OPEC, Russia - which is not an OPEC member but is taking part in the meeting as an observer - is said to have agreed Tuesday to cut its own production by 350,000 barrels per day.
Early Wednesday, the price in New York of a barrel of light sweet crude was up 1.35 per cent, to 44.19 dollars, in anticipation of an OPEC production cut. In July, a barrel of oil cost 147 dollars.
On Tuesday, OPEC said oil consumption was expected to fall to 85.68 million barrels per day in 2009, a year-on-year decrease of 0.18 per cent.