Saudi Arabia yields to OPEC pressure, cuts oil output

January 22, 1992|By New York Times News Service

PARIS — PARIS--Yielding to increasing pressure from other OPEC members, Saudi Arabia said yesterday that it would cut oil production by about 100,000 barrels a day.

The reduction by Saudi Arabia, the world's largest exporter of crude, amounts to a modest 1.2 percent of its daily output, but some analysts said that in coming months, in cooperation with opther members of the Organization of Petroleum Exporting Countries, the Saudis could make further cuts.

In the last two week, Venezuela, Nigeria, Algeria and Libya have each announced reductions ranging from 20,000 to 50,000 barrels a day. Iran is widely expected to cut its output of more than 3 million barrels a day by at least 100,000 barrels, and Indonesia will also announce cuts of about 50,000 barrels a day, said OPEC officials who spoke on the condition of anonymity.

The Saudis' move marks the first time since May 1990 that they have shown a willingness to reduce production with the explicit purpose of lifting oil prices, despite continued pleas and pressures from other OPEC members.

Some OPEC officials said it now appeared that Saudi Arabia might be paving the way, along with other OPEC members, for a much bigger cutback when the group's oil ministers meet Feb 12 in Geneva.

The OPEC reference price for oil, based on a basket of seven commonly traded types, has dropped below $17 after moving as high as $21 a barrel a year ago.

On the New York Mercantile Exchange yesterday, traders expressed disappointment with the size of the Saudi cut by driving down the price for February delivery of higher-grade American crude by 42 cents, to $18.47.

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