OPEC to Cut Production by Two Million BPD
At today's emergency meeting in Vienna, OPEC members agreed to cut production by two million barrels per day from current output levels. However, they also decided to increase their production limit to 25.4 million barrels per day from the current limit of 24.5 million barrels per day.
When the cartel meets again on June 11th they will review the possibility of making even deeper production cuts, according to President Abdullah bin Hamad Al Attiyah. Mr. Al Attiyah said it wouldn't be too late when its latest decision comes into effect in June. "If we do nothing, the price could fall below $22 barrels. Everyone in OPEC proposed the quota change," he said. The price band mechanism that OPEC uses to steer the price with will remain in place.
The key 27.4 million barrels a day output figure from which OPEC has decided to trim two million barrels a day includes some prewar Iraq oil production, Mr. Al Attiyah said. Taking out this amount of oil takes the group down to its new output ceiling of 25.4 million barrels a day, he added.
The issue of individual members' requests for quota changes was not discussed, however, Iraq's quotes will be reviewed when the county resume production.
The OPEC president said he had had support from non-OPEC countries such as Russia, Mexico and Oman, without giving further details.