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|Thursday, January 18, 2001, updated at 10:03(GMT+8)|
OPEC to Cut Oil OutputThe Organization of Petroleum Exporting Countries agreed Wednesday to cut crude oil production for the first time in two years, promising a reduction of more than 5% to try to keep oil prices high.
As expected, OPEC will slash daily supply by 1.5 million barrels beginning Feb. 1 and may cut again if needed, ministers said. The move could keep New York oil prices near $30 a barrel, 50% higher than the average through the 1990s, increasing energy costs for manufacturers and motorists at a time of slowing economic growth.
Brent crude oil, which had risen for six straight days, slid as much as 81 cents after the accord was announced, to $24.71 a barrel on London's International Petroleum Exchange. In the USA, benchmark crude oil prices on the New York Mercantile Exchange were down 81 cents at $29.48 a barrel.
Some members had sought a reduction twice the size of the one agreed to, though OPEC ministers said the accord would keep crude prices high.
OPEC acted after crude oil prices fell more than 25% since October to around $25 a barrel in London, sparking concern of a larger decline as oil demand slows this quarter. An International Monetary Fund official said recently that group would ''significantly'' lower a forecast for 4.2% world growth this year, which would result in reduced oil consumption.
The oil accord, backed by Saudi Arabia, the world's largest oil-producing country, was reached at an informal meeting of OPEC oil ministers. After announcing the plan, ministers headed to OPEC headquarters for formal ratification.
The USA, which consumes about a quarter of the world's oil, had lobbied OPEC for no change in output, arguing that inventories had yet to return to normal and that oil at $30 a barrel would accelerate inflation and hurt economic growth. Analysts agreed.
OPEC increased production four times last year, to a 21-year high, as prices rose to levels not seen since the 1990-91 Gulf war. Supply targets for 10 of the group's 11 members rose by about 3.7 million barrels a day during 2000 to 26.7 million barrels a day.
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