Word: opec
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With a worldwide oil glut estimated to exceed 5 billion bbl. of crude, OPEC is making its first attempt ever to firm up prices by reducing production. But the 13 members voted to curtail output by only 9.6%, or some...
...whether the cut would firm up prices. The cost of competing North Sea oil on the spot market slid a few cents a barrel, to about $28, approximately the same level as the week before. Oil experts say that it may be several months before the effects of the OPEC cuts can be fully evaluated...
Though the size of the reduction is modest, industry experts were impressed by the sheer fact that the fiercely nationalistic and independent-minded oil producers had agreed to any sort of production quotas. "Now you can call us a real cartel," crowed one senior OPEC staffer, after agreement was reached two weeks ago in Vienna. "What matters is not the production target alone, but the fact that we have set one, and announced it for the first time...
...deal, OPEC's total daily output is expected to drop from the early March level of 18.2 million bbl. to 17.5 million bbl. Some 500,000 bbl. of the cut will be sustained by Saudi Arabia, the cartel's largest single producer, with the remaining 200,000 bbl. being spread among other members. The group agreed to review its pricing and production arrangements in several weeks, when the organization's members gather for a previously scheduled spring conference in Quito, Ecuador. Said OPEC President Mani Said al-Oteiba of the United Arab Emirates: "If need...
...Whether OPEC's price-propping ploy succeeds will depend on the willingness of members to abide by the agreement. In the past two years, weakening worldwide demand for oil has driven down the spot-market prices for crude until they were about $6 per bbl. below the official OPEC benchmark price of $34 per bbl. If prices continue to slide, cash-hungry producers such as Algeria, Venezuela and Nigeria will be tempted to offer under-the-table deals to potential customers in order to take sales away from other cartel producers. To monitor compliance, OPEC decided...