OPEC President Calls for Slash in Oil Production
The Organization of Petroleum Exporting Countries needs cut to oil production by as much as 1.5 million barrels a day to help crude prices recover from their recent slide, OPEC’s president said Tuesday as cartel ministers arrived for an emergency meeting.
The cartel’s president, Algerian Oil Minister Sadek Boussena, called the meeting for today to try to curb overproduction and boost prices that have dropped by more than 20% since January.
At issue is whether OPEC should lower its official production ceiling or alternatively cut its output, thus officially acknowledging violations of individual member quotas.
Another issue is whether quota violators should bear the burden of any reduction or whether all 13 members should contribute equally.
Analysts say violations by Saudi Arabia, Kuwait and the United Arab Emirates have pushed OPEC output above the cartel’s self-imposed ceiling of 22.1 million barrels a day for the first six months of the year.
On arriving in Geneva, Iraqi Oil Minister Issam Abdul-Rahim Chalabi said OPEC’s daily output currently was between 23.7 million barrels and 24 million barrels.
Overproduction has caused a glut during a time of seasonally slackening demand in the second quarter. That has depressed prices well below OPEC’s minimum reference price of $18 a barrel.
The average price of seven crudes monitored by OPEC stood at $15.37 per 42-gallon barrel last week.
North Sea Brent Blend, the most widely traded international crude oil, fetched a spot price of $16.45 a barrel late Tuesday in London, unchanged from late Monday.
The June contract for West Texas Intermediate, the benchmark U.S. crude, settled at $18.81 a barrel Tuesday on the New York Mercantile Exchange. The near-month contract traded at more than $24 in late January.
Boussena said: “The single target is clear, how to eliminate the surpluses existing in the market in order to allow a price recovery. It is a single target, and I’m certainly hopeful we can achieve that target.”
Asked how much output needed to be cut, he responded: “It certainly is something between 1 (million) and 1 1/2 million barrels a day.” When asked if such a cut would come from current production, he replied affirmatively.