OPEC struck a deal today to take some excess oil off the market, although one big Persian Gulf producer, the United Arab Emirates, said it will ignore the accord.
Key ministers of the Organization of Petroleum Exporting Countries hope that a new set of output quotas will cut the flow of OPEC crude oil from more than 23 million barrels daily now by at least 750,000 next spring. The hopes were raised despite the emirates' voicing reservations and saying they will continue to determine their own output volume.
Under the pact, OPEC got another big Gulf producer, Kuwait, which had lately joined the UAE in flouting the rules, back in its quota system--with a pledge to cut its output.
New York futures prices rose a quick 15 cents a barrel on the OPEC news, taking the U.S. benchmark grade of crude oil, West Texas Intermediate, almost to $19.80 a barrel. But just as quickly prices dropped to $19.58 on the New York market in late morning because traders expect the emirates to continue to overproduce and keep total OPEC production high.
"Yes, we have an agreement," said a beaming Hisham Nazer, the minister of OPEC's biggest producer, Saudi Arabia, after nearly six days of hotel suite bargaining.
"No," the emirates' oil minister, Mana Said Oteiba, told reporters flatly when they asked if he had accepted the highest quota that the OPEC majority was willing to give him--1.5 million.