OPEC ministers agree to reduce overall output, increase quotas

Member states of the Organization of Petroleum Exporting Countries (OPEC) have agreed to reduce overall output to today's newly established quota total - some 1.3 million barrels per day (BPD) higher than before - to keep prices in the target midrange of US$22-$28 per barrels, OGI news reported Friday.

In effect, boosting the official production ceiling from 21.7 million BPD to 23 million BPD to cover most of the current cheating in an effort to regain some of the cartel 's lost credibility.

To bring actual production in line with the new official quota maximum, members will have to cut their combined official and unofficial output by nearly 1.7 million BPD.

Analysts are doubtful several OPEC members will comply with the new directive and drastically reduce or even end their quota-busting over production, despite Qatar's Minister Abdullah al-Attiyah' s account of the meeting being that all the members were strongly in support of the change and promised to comply.

The Persian Gulf states alone, comprising most of the OPEC membership, is estimated to lose as much as $4 billion in revenues if they do comply. Other states, such as Venezuela (which did not attend the ministerial meeting), Algeria, and Nigeria have been campaigning for higher shares of the overall OPEC total output and did not get them at this meeting, thus may continue to exceed their new quotas as well.

Chakib Khelil, Algeria's petroleum minister, said after the meeting, "We have agreed to increase quotas by 1.3 million BPD, and the general agreement is to reduce overall production to the level of the new quotas to keep prices between $22 and $28." (*)