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LONDON (Islamweb & News Agencies) - OPEC on Wednesday agreed to curtail oil supplies for the third time this year in a bid to lift crude prices back toward its 25-a-barrel target.
Ministers, in an agreement reached over the telephone, reduced output by a million barrels a day, or four percent, from September 1.
Western experts say, the tough new restrictions will reignite concerns among oil consuming nations about a renewed bout of energy price inflation when the world's industrialized powers are struggling to avoid recession.
Supply limits for 10 OPEC producers were pared to 23.2 million barrels daily, the group's lowest production since April of 1999 when tight curbs sent prices spiraling to a peak of 35 a barrel.
President Bush said he hoped OPEC was trying to do no more than stabilize oil prices.
``A run-up in energy prices would hurt. Surely the OPEC leaders understand that. I think they do,'' Bush said.
OPEC said in a communique from its Vienna headquarters that the decision was taken in the interest of market stability after the slowing world economy had eased petroleum demand and helped build petroleum stockpiles.
But traders and analysts said the cutbacks were likely to force prices higher as refiners seek to build inventories heading into the peak winter demand season.
HEDGE FUNDS KEY
Benchmark Brent blend rose 47 cents to 25.34 a barrel. U.S. light crude added 43 cents to 26.74.
Dealers said the speed of any further price rise in weeks to come may depend on how long hedge fund speculators can hold their nerve.
The funds are holding near-record short positions, a bet that prices will fall, in New York Mercantile Exchange crude and petroleum products contracts.
Producers have struggled to maintain prices this year in the face of a slowdown in oil demand growth that has accompanied deteriorating world economic conditions.
Some market analysts question OPEC's wisdom in trying to lift prices again when petroleum demand projections are being scaled back.
But producers decided the best way of maintaining export revenues was by boosting prices back to the middle of their preferred 22-28 range for a basket of OPEC crudes that fell close to 22 last week.
Secretary-General of OPEC Ali Rodriguez-Araque of Venezuela (R) and President of the Conference Chakib Khelil of Algeria talk to journalists at the beginning of the 116th extraordinary meeting of the OPEC conference in Vienna July 3, 2001. OPEC producers agreed to keep oil output limits unchanged as expectations rose for an imminent resumption of Iraq's U.N.-supervised crude exports. REUTERS/Herwig Prammer
- Jul 03 4:25 PM ET
- Author:
Islamweb & News Agencies - Section:
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