Mexico ready to cut oil production

by The Associated Press

Mexico will cut oil exports up to 100,000 barrels per day in 2002 as part of OPEC’s efforts to reduce oversupply in the world market, the Energy Ministry said the night of Wednesday, Nov. 14.

The decision comes after the Organization of Petroleum Exporting Countries agreed Wednesday afternoon in Vienna to cut its quotas by 1.5 million barrels a day beginning Jan. 1, a move the group says is dependent on Mexico and other non-OPEC producers following its lead. The cut represents a 6 percent production cut for the cartel.

OPEC officials said they wanted 500,000 bpd in non-OPEC cuts to avoid their members losing market share by bearing the full weight of the reductions. Until Mexico made its announcement, no major non-OPEC producers except Russia seemed willing to cooperate with the cartel. And Russia had pledged only token support with a 30,000 bpd reduction, representing less than 0.5 percent of its production. Russia is the world’s second biggest exporter after OPEC member Saudi Arabia.

Mexico is the third leading exporter of oil to the United States behind Saudi Arabia and Venezuela.

Energy Ministry officials said Mexico’s decision to cut exports is also dependent on other non-OPEC producers joining the effort.

Mexico’s state oil monopoly Petroleos Mexicanos, or Pemex, exports 1.65 million bpd, out of its total production of 3.1 million bpd.

“Mexico considers that there has been an important imbalance in supply and demand in the world oil market in recent weeks,” the ministry said in a statement.

OPEC supplies about a third of the world’s oil. Its goal is to keep the price of crude within the $22 to $28 a barrel range.

The cartel has cut production three times this year, most recently on Sept. 1.

Bush gives prices modest boost

Bush said the reserve, which currently has 544 million barrels of oil, is to be filled “in a deliberate and cost-effective manner” up to its full capacity of 700 million barrels.