Kuwait Agrees to Slash Its Oil Output by Half

Kuwait today announced it is slashing oil production by nearly half in accordance with a new Iranian proposal to reduce OPEC’s output and raise prices, as the 12 other cartel members studied the plan.

Iran’s proposal would return all members of the Organization of Petroleum Exporting Countries except Iraq and Ecuador to production levels of October, 1984, and cut the cartel’s combined output to around 16 million barrels a day, high-ranking OPEC sources said.

The developments appeared to bring the cartel closer to an agreement on cutting production, which many oil industry analysts regard as the key to reversing a worldwide slump in prices.

Responses Enthusiastic

The OPEC sources declined to give more details about the proposal, but said initial responses from member governments were enthusiastic.

Kuwait’s official news agency KUNA reported that the government was accepting Iran’s “temporary solution” to the quota problem.

The statement--the first official confirmation of Iran’s plan--said Kuwait’s acceptance is conditional on all OPEC member countries, except Iraq, abiding by their quotas. Iraq and Iran have been warring for nearly six years.

It said Kuwait would reduce production by 700,000 barrels a day from its current output of 1.6 million barrels a day, in line with the Iranian proposal.

It said Kuwait would break the agreement if any other country violated the quota accord.

The 13-nation cartel is currently pumping around 20 million barrels a day to an already glutted world market and such a production cut would gradually substantially raise oil prices, analysts said.