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Oman to reduce oil output by more than expected Reduction boosts chances of large cut by OPEC Jan. 1, even though goal of non-OPEC cuts of 500,000 barrels a day not achieved by The Associated Press Business Writer
The likelihood that OPEC would curtail oil production by 6 percent and avert a global price war grew stronger Dec. 20 after Oman pledged to increase the size of a reciprocal cut in its own crude output.
Members of the Organization of Petroleum Exporting Countries agreed in November to trim their supplies by 1.5 million barrels a day in an effort to lift sagging oil prices. OPEC insists, however, that it will do so only if independent producers outside the cartel contribute by skimming 500,000 barrels from their daily output.
In a surprise move, the Persian Gulf state of Oman boosted the size of its promised cut to 40,000 barrels a day from 25,000 barrels, swelling the total commitment from non-OPEC producers to 462,500 barrels a day.
Oman's action eased concerns that OPEC might trigger a petroleum price war by refusing to put its own cuts into effect and swamping the world with oil.
“The decision to increase our contribution ... is to give support to the initiative of both OPEC and non-OPEC oil exporters in stabilizing the (oil) price in 2002,” said Omani Oil Minister Mohammed Hamed Saif al-Rumhy.
The minister said Oman's cut would be effective for six months.
Goal “practically achieved” Venezuelan Oil Minister Alvaro Silva said he thinks OPEC is likely to go ahead with its planned cut of 1.5 million barrels even if total contributions from non-OPEC producers don't quite add up to the magic number of 500,000.
“We believe it's already practically achieved,” he said. “A barrel less or a barrel more, the fundamentals are there.”
February contracts of North Sea Brent crude fell 27 cents to $19.20 a barrel in afternoon trading on the International Petroleum Exchange in London. Contracts of light, sweet crude fell 56 cents to $19.24 a barrel on the New York Mercantile Exchange.
U.S. prices have plunged 27 percent since Sept. 10, the day before the terror attacks on the United States. The attacks aggravated an economic slowdown, and slumping demand for oil, that was already under way at the time.
Desperate to reverse this slide, OPEC is coordinating a worldwide reduction in supply. It has persuaded Russia and Norway each to pledge cuts of 150,000 barrels a day. Mexico has promised to cut by 100,000 barrels and Angola by 22,500 barrels.
OPEC's official daily output target is 23.2 million barrels, and it pumps about a third of the world's oil. It has planned to make its cuts effective Jan. 1.
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