- Title: ALGERIA: OPEC makes deepest oil cut ever to rescue prices
- Date: 18th December 2008
- Summary: ORAN, ALGERIA ( DECEMBER 17, 2008) (REUTERS) OPEC PRESIDENT, ALGERIAN OIL MINISTER CHAKIB KHELIL AND OPEC SPOKESMAN OMAR IBRAHIM ENTERING NEWS CONFERENCE JOURNALISTS GATHERED IBRAHIM SPEAKING (SOUNDBITE) (English) OPEC SPOKESMAN OMAR IBRAHIM SAYING: "The impact of the grave global economic downturn has led to a destruction of demand resulting in unprecedented downward pressure being exerted on prices, which have fallen by more than 90 dollars per barrel since early July 2008. Indeed the conference noted that if unchecked, prices could fall to levels which could place in jeopardy the investments required to guarantee adequate energy supplies in the medium to long term. In light of the above the conference agreed to cut 4.2 million barrels per day from the actual September 2008 OPEC production of 29.045 million barrels per day effective January 1, 2009 with member countries strongly emphasising their firm commitment to ensure that their production is reduced by the individually agreed amounts." JOURNALISTS LISTENING (SOUNDBITE) (English) OPEC PRESIDENT, ALGERIAN OIL MINISTER CHAKIB KHELIL SAYING: ++AUDIO AS INCOMING++ "The drop of prices of course is due to the repercussions of the financial crisis on the real economy and the drop in oil demand, and of course, that's not the only reason. I think there are some speculations, in the sense that speculators pulled out of the market and made the job even faster than what you would expect. Now, as far as the OPEC organisation, we don' t have really a price target, but there were some mentioned by higher officials of the organisation talking about the level of prices of 70 to 80 dollars." MEDIA WIDE OF PODIUM WIDE OF NEWS CONFERENCE
- Embargoed: 2nd January 2009 12:00
- Keywords:
- Location: Algeria
- Country: Algeria
- Topics: International Relations
- Reuters ID: LVAAEAS50HFO5J5B6MTG8N8YZZOS
- Story Text: In an attempt to prop up oil prices, OPEC ministers agree on the biggest cut in oil production in its history.
OPEC oil ministers agreed their deepest output cut ever on Wednesday (December 17), slashing 2.2 million barrels per day from oil markets in a race to balance supply with rapidly crumbling demand for fuel.
The cut, effective from January 1, comes on top of existing reductions of 2 million bpd agreed by OPEC at its last two meetings. It lowers the group's supply target to 24.845 million bpd.
"The impact of the grave global economic downturn has led to a destruction of demand resulting in unprecedented downward pressure being exerted on prices, which have fallen by more than 90 dollars per barrel since early July 2008. Indeed the conference noted that if unchecked, prices could fall to levels which could place in jeopardy the investments required to guarantee adequate energy supplies in the medium to long term.
In light of the above the conference agreed to cut 4.2 million barrels per day from the actual September 2008 OPEC production of 29.045 million barrels per day effective January 1, 2009 with member countries strongly emphasising their firm commitment to ensure that their production is reduced by the individually agreed amounts," OPEC spokesman Omar Ibrahim said.
Oil fell more than 3 US dollars a barrel towards 40 US dollars following the deal after weekly U.S. data showed inventories in the world's biggest consumer continued to swell.
Washington quickly condemned OPEC's attempts to end cheaper oil prices.
Its cut, the third this year, brings a total reduction in OPEC supply to 4.2 million bpd, nearly a five percent cut in world oil supplies.
A deepening recession has battered world demand and fuel inventories are bulging worldwide. Prices already have plunged by two-thirds since the summer and analysts say the oil market is under the sway of world financial turmoil.
OPEC's president said the group did not have a price target, but that some
"higher officials of the organisation were talking about the level of prices of 70 to 80 dollars" as the targeted price.
"The drop of prices of course is due to the repercussions of the financial crisis on the real economy and the drop in oil demand, and of course, that's not the only reason. I think there are some speculations, in the sense that speculators pulled out of the market and made the job even faster than what you would expect. Now, as far as the OPEC organisation, we don' t have really a price target, but there were some mentioned by higher officials of the organisation talking about the level of prices of 70 to 80 dollars," said Chakib Khelil who is also Algeria's oil minister.
The cut, the third this year, brings a total reduction in OPEC supply to 4.2 million bpd, nearly a five percent cut in world oil supplies.
Oil below 50 US dollars is uncomfortable for all producing nations, but especially for OPEC members Venezuela and Iran which are dependent on higher prices to fund ambitious domestic programmes.
Analysts say a limited recovery in prices would put a bit more strain on a recessionary global economy, but it may help pull the world back from the brink of deflation -- a growing source of concern.
OPEC has encouraged other producers to cut back too. Russia and Azerbaijan attended the Oran meeting as observers and have said they could rein in exports in future, but stopped short of am immediate pledge.
Leading a high level delegation, Russia's Deputy Prime Minister Igor Sechin said in a speech to OPEC that Moscow did not plan to join in coordinated output cuts and did not want to join the group.
OPEC is due to meet again on Mar 15. - Copyright Holder: REUTERS
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