OPEC ministers decided Tuesday to yank about 1 million barrels of oil a day off the world market in an effort to firm up crude prices, a delegate to the talks said.
Gabonese Oil Minister Jean Ping said the cartel had agreed to set a production ceiling of 22.3 million barrels a day in the April-June quarter. He said Algeria and Iran expressed reservations.The reported decision came after ministers of the 13-nation Organization of Petroleum Exporting Countries were in the second day of talks on what to do about runaway production in the aftermath of the gulf war.
They had gathered in late afternoon to consider a proposal to pare cartel production from 23.4 million barrels a day to 22.3 million barrels in the April-June quarter.
Word of the production cut agreement got an initially skeptical reaction on the world oil markets, where prices fell on the theory that the agreement wouldn't hold and was insufficient to erase a worldwide glut.
On the New York Mercantile Exchange, April-delivery contracts for light sweet crude oil were off 34 cents a barrel to $18.65 by early afternoon. In London, April-delivery contracts for Brent crude, a benchmark European blend, traded at $18.15 a barrel, down 22 cents.
It appeared the final arrangement would be an informal one and perhaps all might not join in. Iraq did not send an emissary.
Saudi Arabia, the cartel's pivotal member which produces about a third of the group's oil, had made it known it does not want to turn down its taps too much from its current output of 8.4 million barrels a day.
Iranian Oil Minister Gholamreza Aqazadeh had said the cartel needed to make a sharp cut in production to get up to its target of $21 a barrel.
He had suggested a cutback of 1.5 million to 2 million barrels a day - down to a ceiling of 21 million to 21.5 million barrels in the April-June quarter.
"More than this level, we cannot reach $21," he said.
The average price of a basket of crudes monitored by OPEC was $17.72 a barrel last week.