OPEC to cut output soon

| 11/2/2001

In an effort to halt declining oil prices, the Organization of the Petroleum Exporting Countries announced it would reduce daily oil output starting on Jan. 1. It remains to be seen whether OPEC will succeed in bolstering oil prices because major non-OPEC producers like Mexico, Russia and Angola have said they will not reduce exports to bolster prices.

Since the Sept. 11 terrorist attacks sent the global economy into a tailspin, oil demand dwindled rapidly and prices plummeted. Prices have since stabilized at about $21 a barrel.

An OPEC spokesman said the cartel was determined to nudge the price per barrel up to $25 a barrel by reducing output and restraining the rampant overproduction among its members, the New York Times reported. OPEC countries have been pumping far more than their official quotas to take advantage of current prices, but recent data show that such cheating has been curbed.

The spokesman did not specify how great the reduction would be, but left no doubt one was imminent. Most industry analysts expect OPEC, which produces about 35 percent of the world's oil, to pare back exports by 700,000 to a million barrels per day. The group has already pulled back production three times this year by a total of 3.5 million barrels a day, or about 13 percent.