Vienna - The Organization of the Petroleum Exporting Countries (OPEC) decided early Wednesday to cut its output by around 520,000 barrels a day - contrary to earlier indications - in a bid to stem falling oil prices. The cartel said the market was over-supplied and gave a number of factors "causing downside risks to the global oil market outlook."
Besides a higher crude supply, a global economic slowdown, lower oil demand growth, a stronger US dollar and the easing of geopolitical tensions were mentioned as factors pulling down prices in an OPEC statement issued after the September conference of its member countries' oil ministers in Vienna.
"My hunch is prices will still go down despite the reduction," Algerian Energy Minister and OPEC Conference President Chakib Khelil said after the conference. Recent experience had shown that a strengthening dollar would dampen oil prices, he said.
OPEC, which accounts for about 40 per cent of global oil output, decided to scale back production to 28.8 million barrels per day. Indonesia suspended its OPEC membership from 2009 and was not included in the new quota.
Several oil ministers, including Khelil, as well as experts had predicted OPEC would keep its present output.
Although the oil cartel called on its members to "strictly comply" with the new production target, it remained to be seen how much output would decrease in real terms.
In August, OPEC members were producing 800,000 more barrels per day than they had agreed to.
Because markets had anticipated OPEC would keep oil output steady, the price of oil dropped to a five-month low in New York trading Tuesday, down nearly 30 per cent from a July record.
Crude oil for October delivery fell 2.47 dollars to 103.87 dollars per barrel (159 litres) by the afternoon.
The next OPEC meeting is to take place on December 17 in Oran, Algeria.
