Kuwaiti Minister of Oil Saud Nasser Al-Sabah Monday raised the specter of a 1 million b/d cut in the Organization of Petroleum Exporting Countries' total production to counter the slumping oil price, according to a report from OPEC's news agency, OPECNA.
Speaking in an interview with the Kuwaiti daily, Al-Rai-Al-Am, Al-Sabah said OPEC would study the current oil price decline in the run-up to the organization's Jan. 17 meeting in Vienna to determine if�as has been suggested by several OPEC ministers in the last month�such a massive cut to output will be needed to avoid a price collapse in the spring.
OPECNA reported Al-Sabah as saying, "1 million b/d of oil could be withdrawn from the market as a measure to face the decline in prices, especially during the spring and summer months when consumption drops and international oil demand falls."
Al-Sabah's sentiments were echoed by the Algerian Energy and Mines Minister Chakib Khelil who, in an interview with the Egyptian newspaper Al Ahram, said the prospect of a sharp drop in the oil price had ruled out the possibility of OPEC raising production again in the short term.
Khelil, the current OPEC president designate, added that once he took up the post next year, he would continue to work towards "instigating a strategy that was able to stabilize oil prices between $22-28/bbl," the organization's so-called price band.
He also promised to "intensify transparency within the organization and its members and to better manage the group's affairs."
Wael Al-Mudhaf, the Director of the Economic Department at Kuwait's Oil Ministry, noted that current fluctuations in the oil price were the result of uncertainty brought about by the "Iraq-United Nations issue," US elections, and "reports and statements concerning the level of [global] oil stockpiles."
Meanwhile, one factor adversely influencing current crude oil prices, the UN stalemate with Iraq over renewal of its oil-for-food program, was settled Tuesday when Iraq agreed to the terms of a 6-month extension.
The UN Security Council had decided last Tuesday to reinstate humanitarian aid to Iraq starting on Dec. 6 and given the green light to a new pricing formula 2 days later, removing the sticking point stopping Iraq from exporting some 2.2 million b/d.
Oil exports�which were to have resumed Friday but for bad weather affecting the Iraqi port of Mina Al Bakr�had been suspended for the last 10 days.
The new pricing formula deepened the discount at which Iraqi crude was sold to the US and Europe.
Iraq relayed its acceptance of the renewal via its Foreign Minister, Mohamed Said Al Sahaf, to UN Sec. Gen. Kofi Annan.
The oil-for-food program, begun in late 1996, allows Iraq to sell oil under UN supervision to buy food, medicine, oil spare parts, and other goods, as part of an initiative that aims to ease the impact of UN sanctions on the country that were imposed in 1990 after the Gulf War.