- Title: ALGERIA: OPEC plans drastic cut in oil production
- Date: 17th December 2008
- Summary: BOUTEFLIKA ENTERING HOTEL SURROUNDED BY SECURITY, WAVING AT MEDIA AND HOTEL STAFF, HOTEL STAFF CHEERING PANORAMA OF ORAN
- Embargoed: 1st January 2009 12:00
- Location: Algeria
- Country: Algeria
- Topics: International Relations,Energy
- Reuters ID: LVA2Z9XMKX6HUG7U4LX63GCAAPLE
- Story Text: OPEC plans a drastic cut in oil production to try and stop oil prices falling any further.
OPEC oil producers are likely to announce their biggest-ever cut in production when they meet in the Algerian city of Oran on Wednesday (December 17), in a bold attempt to stop further collapse in oil prices.
"Tomorrow we expect to have a decision to cut production by at least one million, between one and two million barrels. We are going to discuss that. We have to make a very, very strong decision," the Venezuelan oil minister told reporters on his arrival in Oran.
14 banks, companies and research groups surveyed by Reuters on December 15 thought the Organisation of Petroleum Exporting Countries would reduce output by at least 1.5 million barrels per day.
The average forecast was for an even bigger cut -- probably around two million barrels per day (bpd), which would be the deepest cut in production to be agreed since the group, which pumps more than a third of the world's oil, was established almost 50 years ago.
OPEC is meeting for the third time in as many months as it grapples with an oil market that has imploded since July.
In just over five months, oil prices have plunged by around $100 per barrel as recession has swept the globe, cutting oil consumption by consumers and companies alike. By 1130 GMT on Tuesday (December 16), U.S. crude oil futures were trading at $44.85.
OPEC's members are united by the need to prop up oil prices.
Economists calculate that at $40 per barrel, 11 of OPEC's 12 members, as well as Russia and Mexico, face budget deficits.
Only tiny Qatar would have a surplus in its 2008 government budget in the current market.
OPEC hopes to get support from the biggest non-OPEC oil exporter: Russia is sending its highest ranking delegation ever to the OPEC meeting including the heads of its five top oil companies, and some analysts think Russia may support OPEC by agreeing to make a parallel cut in oil output, possibly of up to 0.5 million bpd.
Algerian President Abdelaziz Bouteflika will open the Wednesday meeting in Oran and address the ministers before their closed session.
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