By the OGJ Online Staff
HOUSTON, July 25 -- Members of the Organization of Petroleum Exporting Countries said Wednesday they are reducing their oil production quota 1 million b/d effective Sept. 1 to reinforce the sagging oil market.
The widely-anticipated action -- the third OPEC production cut this year -- was taken without a formal meeting. OPEC said, however, it still has the option to meet soon if the market continues to slide.
The action reduces OPEC's quota for ten member nations to 23,201,000 b/d, although the US Energy Information Administration estimated the ten OPEC nations had been producing 25,145,000 b/d earlier this month, not including 2.1 million b/d from Iraq.
The cartel said, "Considering the impact of the slowing world economy on oil demand, and the relatively strong build-up of oil stocks, OPEC's objectives are to ensure market stability, satisfy world demand and avoid oil price volatility, in the interest of both producers and consumers."
It expressed hope that non-OPEC producers also reduce oil output because their interests are "best served through market stability."
Under the plan, Algeria's quota would drop 32,000 b/d to 741,000 b/d, Indonesia 52,000 b/d to 1,203,000 b/d, Iran 146,000 b/d to 3,406,000 b/d, Kuwait 80,000 b/d to 1,861,000 b/d, and Libya 54,000 b/d to 1,242,000 b/d.
Also, Nigeria's quota would fall 82,000 b/d to 1,911,000 b/d, Qatar 26,000 b/d to 601,000 b/d, Saudi Arabia 324,000 b/d to 7,541,000 b/d, UAE 88,000 b/d to 2,025,000 b/d, and Venezuela 116,000 b/d to 2,670,000 b/d.
Earlier, two oil ministers said OPEC representatives had been discussing a potential cut by telephone and fax machine.
Alvaro Silva Calderon, Venezuela's Minister of Energy and Mines; and Obaid Bin Saif Al-Nasseri, Minister of Petroleum and Mineral Resources for the United Arab Emirates, said OPEC members were considering action without the delay of a face-to-face meeting.
Silva Calderon said there was an oversupply of 2 million b/d on world oil markets and a reduction of 1-1.5 million b/d would help keep prices within the group's targeted price band of $22-$28/bbl.
Al-Nasseri said, "A production cut in the range of 1 million b/d would be suitable for the time being."
He said, "OPEC's trend to reduce output, although prices are not declining to the minimum range of the OPEC-assigned price, comes within the organization's initiative to stop prices from collapsing lower than the designed limit and to defend the targeted price of $25/bbl."
