Oil ministers endorse OPEC oil cut

Momentum toward a hefty 6 percent cut in OPEC ) crude production increased Thursday when several of the cartel's oil ministers endorsed the move despite disappointment at smaller than expected cuts from non-OPEC producers, AP reported Thursday.

Saudi Arabia's Oil Minister Ali Naimi said he was certain the Organization of Petroleum Exporting Countries would trim its official output by 1.5 million barrels a day. The cuts were likely to take effect Jan. 1 and last for six months, he told reporters.

Naimi's counterpart from the United Arab Emirates, Obaid Al-Nasseri, said OPEC would ``definitely'' cut production by that amount, for at least the first quarter of next year.

The ministers spoke on the eve of an extraordinary OPEC meeting in Cairo called to consider a production proposal the group agreed to last month.

OPEC hopes to bolster faltering crude prices by curtailing output. A general decline in global economic activity had already started to drag down prices even before the Sept. 11 terror attacks on the United States.

The ministers' comments sent the price of Brent crude for February delivery surging $1 on the International Petroleum Exchange in London, with contracts trading in the afternoon at $20.34 a barrel.

February contracts of light, sweet crude fell 50 cents to $20.77 in afternoon trading on the New York Mercantile Exchange, after rocketing 8 percent higher the previous day to close at $21.27 a barrel.

Although OPEC has agreed in principle to reduce its official production, it made the decision conditional on a reciprocal decrease of 500,000 barrels a day in output from Russia, Norway and other major oil producers outside the group.

Non-OPEC producers have so far promised to cut by a total of 462,500 barrels a day. Still, all indications from OPEC were that the group wouldn't let this gap hold it back from putting cuts of its own into effect.

An OPEC official, speaking on customary condition of anonymity, said an OPEC production cut was a done deal and that the cartel's 11 members would spend much of Friday's meeting discussing ways of ensuring compliance with the new, lower target.

OPEC's current daily target is 23.2 million barrels, and it pumps about a third of the world's oil.

One hint of possible dissent at the meeting came from Iranian Oil Minister Bijan Namdar Zanganeh, who said OPEC might cut by somewhat less than 1.5 million barrels a day.

``If we want to cut proportionally with non-OPEC, we should cut about 1.3 (million barrels a day),'' he told reporters upon his arrival at a Cairo hotel.

Zanganeh said he was confident that the combined cuts by OPEC and non-OPEC producers would total 1.8 million to 2 million barrels a day.

However, he acknowledged that such a cut still might not be sufficient to lift oil prices back to $22 a barrel - the minimum price OPEC has set for itself as a target for the blend of seven crudes it uses as a benchmark.

``I don't know,'' he said when asked what impact OPEC's proposed cut would have on prices. ``We can only (try) to make a balance in the market.''

Iraqi Oil Minister Amer Mohammed Rasheed, for his part, argued that OPEC should stick with its planned cut and not make its decrease in output proportionate with what non-OPEC countries do.

Crude oil prices have fluctuated between $18 and $21 per barrel since OPEC agreed in November to decrease production by 1.5 million barrels a day, or 6 percent, beginning Jan. 1, so long as non-OPEC nations chipped in with cuts of 500,000 barrels a day.

The non-OPEC members have come close, falling just 37,500 barrels a day short: Norway and Russia have each pledged to cut daily supplies by 150,000 barrels, while Mexico has promised to cut by 100,000 barrels, Oman by 40,000 barrels and Angola by 22,500 barrels.

Some OPEC members, including Saudi Arabia - the group's dominant producer - are suspicious that Russia won't stick with its promised cuts beyond March. Demand for oil typically falls during the second quarter of the year, and OPEC is eager for non-OPEC producers to stick with their cuts for at least the first six months of 2002.

OPEC will reassess the situation at a meeting planned for March, and if necessary, it might even call another extraordinary session at the end of January, said the OPEC official speaking on condition of anonymity.

OPEC's 11 members are: Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela. Iraq doesn't participate in OPEC production agreements because its exports are regulated by the United Nations.(*)