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News // Middle East and OPEC

OPEC Output Cuts - To Be Continued?

05 March 2009 , 09:35Ksenia Kochneva1219
Although it holds the presidency, Angola has only been a member of OPEC since 2007 and independent observers have said its compliance with output curbs has been less strict than that of core Gulf producers.

At the start of February, a source had told Reuters OPEC might discuss another cut of about one million bpd and the group's Secretary General Abdullah al-Badri also said it was willing to cut output further.

Venezuela, Libya and Algeria have similarly raised the possibility of another cut.
But Iran, often among the first to demand action to support a higher price, said this week the group should define "a mechanism to repair prices" rather than cut again in March.

Iranian Oil Minister Gholamhossein Nozari did not explain what that mechanism that might be.

The biggest OPEC producer Saudi Arabia has made few public comments this year, but said in January it would pump below its official OPEC target and do whatever was necessary to bring the market back into balance.

On Wednesday, other sources said a decision had yet to be made, Reuters reported.

"It is still too early to say if they will cut or not," one OPEC source said. "We still need to see."

Since September last year, OPEC has agreed to reduce output by 4.2 million bpd to try to halt a slide that has knocked more than $100 off the oil price.

A Reuters survey found OPEC had so far delivered 81 percent of those curbs, a near record level of compliance with cuts that are the deepest and most rapid yet.

Analysts and OPEC sources have said the oil market is more focused on global economic weakness and its implications for future oil demand than on current market fundamentals, which have tightened in response to OPEC output policy.

"We are going to evaluate the situation and after ... that, some decisions will be taken," OPEC president Jose Botelho de Vasconcelos, who is also Angolan oil minister, told reporters this week.

Whatever OPEC does, it may have a limited price impact, the experts believe.

Source: Reuters

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