OPEC's effort to reduce global oil output and boost prices gained momentum Monday when Russia announced its
intention of cutting exports by 100,000 barrels a day.
Oil-producing nations have essentially agreed to slash total
daily production by more than 2 million barrels, Venezuelan Oil
Minister Ali Rodriguez said.
"Agreement tomorrow is confirmed," Rodriguez said here ahead
of Tuesday's meeting of the Organization of the Petroleum Exporting
Countries. The meeting is expected to result in formal approval of
the production cuts agreed upon earlier this month.
Russia, which is not an OPEC member, will reduce its crude oil
exports from April through June, in part to help strengthen world
oil prices, the Russian Fuel and Energy Ministry announced in
Moscow. Russia is one of the world's largest oil producers at more
than 6 million barrels a day. Of that total, it has been exporting
around 2.3 million barrels daily.
Russia plans to keep the cuts in place for only three months but
will review conditions at the end of June and could extend them,
said Oleg Rumyantsev, a ministry spokesman.
Iraq Oil Minister Amer Mohammed Rasheed minced no words in
summing up the goal of OPEC ministers meeting this week in Vienna.
"We are here ... to save the situation of the collapsing prices
of oil. That is our main objective," Rasheed said Sunday.
Excess supply and a weak demand for winter heating oil sent
prices plunging to 12-year lows late last year. Although consumers
have benefited from cheaper oil and gasoline, the soft market has
inflicted economic pain on producers, including Britain, Norway and
the oil-patch American states of Texas and Louisiana.
Prices finally began surging two weeks ago, when representatives
of OPEC's three biggest members Saudi Arabia, Iran and Venezuela
along with Algeria and non-member Mexico agreed at a meeting in
The Hague, Netherlands, to reduce output.
On the New York Mercantile Exchange, crude oil for April
delivery has traded in the $15-range. In comparison, crude was
trading at about $12 a barrel a month ago.
As a result, gasoline prices have risen sharply in the United
States after falling to all-time lows, when adjusted for inflation.
The national average gas price shot up almost 8 1/2 cents a gallon
in the past two weeks, reaching nearly $1.09 a gallon on Friday,
the Lundberg Survey reported. It was the steepest and fastest rise
since Iraq invaded Kuwait in 1990.
OPEC ministers have expressed hope that oil-exporting nations
would abide by the planned production cuts. The new quotas, which
are to begin April 1, would remain in effect for a full year,
Venezuela's Rodriguez said Sunday.
Under the deal, Saudi Arabia, which currently produces more than
8 million barrels a day, will take the biggest cut 585,000
barrels. No. 2 producer Iran will pump 264,000 fewer barrels a day,
while Rodriguez confirmed that Venezuela will trim daily output by
Saudi Arabian Oil Minister Ali Naimi said Sunday that he
expected full compliance with the new, lower levels of production.
OPEC estimates the current output of its 11 members at 27.66
million barrels a day. At this level, supply exceeds demand by
about 500,000 barrels, according to the Paris-based International
The success of OPEC's effort to buoy prices by pumping less oil
depends upon the compliance of each member, Rodriguez said.
Cheating has been a chronic problem for the group.
Libyan Oil Minister Abdalla Salem El-Badri confirmed that his
country will pump 96,000 fewer barrels a day beginning April 1.
"I hope that everybody will abide by the agreement," El-Badri
Officials from Nigeria, one of OPEC's poorest members, refused
Monday to say whether their country would trim output by 148,000
barrels a day Nigeria's share of the production cuts agreed upon
at The Hague.
The only other OPEC member yet to confirm its share of the
planned cuts is Indonesia, which is suffering economic turmoil and
badly needs the dollars it earns from oil sales abroad.
More ministers arrived Monday and delegates met in small groups
prior to Tuesday's OPEC meeting.
Along with Russia, other OPEC outsiders pledging to reduce
production include Mexico, Oman and Norway.
Members of OPEC are Algeria, Indonesia, Iran, Iraq, Kuwait,
Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and