OPEC members meet 82% of output cuts

Price of Brent crude rises 50% since goals were set

Petroleum

May 14, 1999|By BLOOMBERG NEWS

VIENNA, Austria -- OPEC said yesterday that its members made 82 percent of the oil output cuts promised last month, up from 73 percent in March, as producers slashed production to eliminate a world glut and raise prices.

The Organization of the Petroleum Exporting Countries' official monthly survey, compiled from 11 secondary sources, said Saudi Arabia, the group's biggest oil producer, cut 1.15 million barrels of oil per day, or 88 percent of its promised reduction.

Iran, OPEC's biggest quota buster over the past year, met 67 percent of its pledge last month, while Venezuela, the group's third-biggest oil producer, cut 609,000 barrels a day, or 94 percent.

In agreements stretching back to April 1998, 10 members of OPEC, excluding Iraq, and four other producers agreed to reduce world output by 5.3 million barrels a day. The most recent pact was signed in Vienna in March, where the group pledged to cut 2.1 million barrels a day from April.

"The overall commitment appears strong," said Brad Bourland, chief economist with the Saudi American Bank in Riyadh, the Saudi capital. "It takes time for these agreements to be implemented. I would expect compliance in May to be even higher."

Brent crude, which has climbed about 50 percent in the two months since the most recent cuts were announced, rose as much as 14 cents to $15.74 a barrel on the International Petroleum Exchange.

Oil producers failed to comply with output cuts and reduce the oil glut last year as Iraq more than doubled its output to about 2.7 million barrels a day. Brent crude prices fell 36 percent last year.

Saudi Oil Minister Ali al-Naimi, speaking yesterday at the Arab Capital Markets conference in Beirut, Lebanon, said Brent crude oil would reach $18 to $20 a barrel before the end of the year as the output cuts reduced oil stockpiles, the Saudi press agency reported.

Oil inventories, which rose to more than 300 million barrels last year as oil prices hit record lows, fell in the first quarter this year, the International Energy Agency said Monday. The agency said stockpiles are likely to fall further as driving in the United States and Europe reaches its annual summer peak.

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