OPEC decides to curb overall output; prices rise
Filed Under: Business | Posted: 09/09/2008 at 10:56PM
Comments | Region: United Arab Emirates
OPEC oil ministers agreed Wednesday to trim overall output by more than 500,000 barrels a day in a compromise meant to avoid new turmoil in crude markets while seeking to bolster falling prices.
The news sparked a rebound in oil prices. Light, sweet crude for October delivery rose $1.00 to $104.26 a barrel in electronic trading on the New York Mercantile Exchange.
The OPEC announcement reflected OPEC efforts to cover all bases in an oil market that saw prices spike to a record high just short of $150 a barrel in July, only to shed nearly 30 percent off those peaks in subsequent months.
Oil prices had lost more ground Tuesday ahead of the OPEC decision, falling $3.08 to settle at $103.26 on the Nymex, the lowest settlement price since April 1.
An OPEC statement issued after oil ministers ended their meeting early Wednesday said the organization agreed to produce 28.8 million barrels a day. OPEC President Chakib Khelil said that quota in effect meant that member countries had agreed to cut back 520,000 barrels a day in production over the established quota.
Saudi Arabia alone accounts for more than that amount of output over its official quota – all members of the 13-nation OPEC have such formal production limits allotted to them except violence-torn Iraq. But Khelil said that the cutbacks in overproduction would apply proportionally to all OPEC members bound by quotas.