OPEC has consensus on output cut

The Organization of Petroleum Exporting Countries (OPEC) appeared ready to announce yesterday a 1-million barrel a day cut to the cartel's oil production to help shore up flagging prices, but remained divided on how the reduction would be executed.

"Most important here is that we believe that OPEC have the consensus to cut 1 million barrels per day," Venezuelan Energy Minister Rafael Ramirez said on his arrival in Doha ahead of the cartel's meeting.

"We are going to cut 1 million barrels a day," he said, adding that he believed the move would help to stabilize the market.

But asked whether the cut would be to OPEC quotas or actual production of member states, Ramirez said only: "We are going to discuss this matter inside OPEC."

Meeting yesterday from about 8:00 pm (1700 GMT), the 11-member cartel which accounts for around 80 per cent of global oil reserves must overcome divisions that analysts say are damaging its credibility.

The market is uncertain whether OPEC will decide to cut its official quota of 28 million barrels per day (bpd) which has stood since July 2005 or slash actual production levels which are currently below the quota, owing to disagreements among member nations.

OPEC members, not including Iraq which is excluded from the quota system, are currently producing less crude oil than authorized, with real output estimated at between 27.5 and 27.8 million bpd.

OPEC had last week agreed in principle to a 1-million barrel a day cut as oil prices have fallen to below US$58 per barrel in recent days.

That marked a drop of more than 25 per cent from record highs above US$78 struck in July.

Source: China Daily