OPEC Vows to Cut Output
VIENNA, AustriaIn a desperate effort to stabilize plunging oil prices, OPEC has made a conditional promise to cut crude output that ranks as one of the cartel's weakest and most uncertain agreements in recent memory.The cartel yesterday agreed to reduce its daily production target for oil by 1.5 million barrels, or 6 percent, but only if non-OPEC producers share the burden by making a deep cut of their own. OPEC delegates are asking Norway, Mexico and other independent oil-producing countries to decrease their output by 500,000 barrels, for a combined cut of 2 million barrels a day. The cuts are to take effect Jan. 1, the Associated Press reported.However, industry analysts said major non-OPEC producers are reluctant to cooperate unless they first see OPEC members make a serious effort to keep from busting their own quotas. OPEC currently pumps at least 800,000 barrels above its daily target of 23.2 million barrels.Confronted with a sharp drop in global demand for oil, OPEC has threatened and warned of a price war if producers outside the group refuse to close ranks with it. OPEC members argue that they've already curtailed output by 3.5 billion barrels a day this year without a meaningful contribution from other producers. They say they're tired of giving a free ride to non-OPEC producers, particularly as OPEC has lost market share as a result. Lingering uncertainty from the terrorist attacks on the United States has exacerbated OPEC's problems, with prices tumbling by a third since Sept. 11 alone.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. Russia, the world's third-largest oil producer, has offered to make a token cut of 30,000 barrels a day. Ministers refused to name the other countries that have committed to cut output. Prices, which have reached as low as $18.75 per barrel, got a much-needed boost earlier this week President George W. Bush ordered the U.S. government to put more oil into America's emergency stockpile and for the first time fill the reserve to full capacity. The U.S. Strategic Petroleum Reserve, which currently has 544 million barrels of oil, is to be filled "in a deliberate and cost-effective manner" up to its full capacity of 700 million barrels, Bush said in a statement. The first deliveries are to begin in April.