NON-OPEC PRODUCERS TOLD TO CUT OUTPUT OR FACE PRICE WAR
By Parviz Sahra’i, IPS energy Correspondent
VIENNA 14 Nov. (IPS) The Organisation of Petroleum Exporting Countries (OPEC) agreed on Wednesday to cut output by at least one million barrels per day (bpd) to shore up the crude prices.
OPEC ministers agreed the reduction but said they still hoped key non-OPEC countries would cut 500,000 bpd to bolster crude prices.
Iranian Oil Minister Bizhan Namdar-Zanganeh told the official news agency IRNA that OPEC must not make any further cut in production unless non-OPEC producers co-operates.
Delegates of the 11-member Organisation said they were asking oil-producing countries outside the cartel to decrease output by 500,000 barrels, for a combined cut of 2 million barrels a day aimed at halting the recent slide in oil prices. The cuts are to take effect first of January.
Confronted with a sharp drop in global demand for crude, OPEC members have called on major non-OPEC producers such as Mexico, Norway and Russia, the only major non-OPEC producer so far to publicly declare its willingness to consent a limited cut of 30.000 bpd.
Saudi Arabian Oil Minister Ali al-Nu’aimi, the Organisation’s largest producer, singled out Russia, saying he was disappointed at its token 30,000 cut. "Thirty thousand barrels out of seven million, that disappoints anybody. The Russians know that", he told journalists, referring to Russia's total oil production capacity.
Mr. Chakib Khelil, the Algerian president of the Organisation insisted that the group would not follow through with its planned cuts unless non-OPEC producers shouldered some of the responsibility.
"I don't think this is beyond the capacity of non-OPEC producers to do", he told a news conference after the delegates ended their formal talks.
He noted that OPEC has already curtailed its output by 3.5 million barrels a day this year without a meaningful contribution from other producers.
"We are not putting pressure on others. We are calling for contributions'', OPEC Secretary-General Ali Rodriguez told a news conference after the group ended its formal talks in Vienna on Wednesday.
Pressed by reporters to say what OPEC would do if non-members failed to cut 500,000 barrels a day, Rodriguez replied: "We'll cross the river if we arrive at the river".
"The situation has deteriorated beyond the control of OPEC. It is not an issue of whether we want or we don't want. The issue is whether we can or we cannot'', the Kuwaiti Oil Minister told reporters, adding that without a "substantial contribution" from non-OPEC producers, OPEC cannot maintain the prices.
Qatar's oil minister, Abdullah Bin Hamad Al Attiyah warned that non-OPEC nations might try to grab a bigger share of the world market by increasing their production. "That could trigger rounds of competitive discounts, in my opinion it would be a disaster", he said.
So far, the group has garnered pledges of non-OPEC cuts totaling about 175,000 barrels a day, said Libyan Oil Minister Abdulhafid Mahmoud Zlitni.
OPEC, which pumps about a third of the world's oil, is alarmed by the collapse in demand for crude and the economic uncertainty lingering from the 11 September terrorist attacks on the United States.
Oil prices have tumbled by 25 percent since the tragic events.
OPEC continues to try to peg the price for its benchmark blend of seven crude within a range of $22-28 per barrel.
However, some industry analysts said major non-OPEC producers are unwilling to cooperate unless they see OPEC members making a serious effort to keep from busting their own quotas. OPEC currently pumps about 800,000 barrels above its daily target of 23.2 million barrels.
Mr. Al-Nu’aimi said OPEC should cut by around 1.5 million barrels a day, with non-OPEC providing 500,000 barrels a day.On Wednesday he also reminded non-OPEC countries of previous oil crisis when crude prices collapsed to below 10 dollars a barrel, two years ago and in the mid-1980s."They didn't take long to come running in March 1999 and you know what happened in 1985 and 1986," he said. Asked if similar situations could occur again, he said: "Anything can happen". ENDS OPEC OIL PRICES 141101