“We hope producers do not take actions that hurt our economy,” McCormack

WASHINGTON, February 12  (IslamOnline.net & News Agencies) - The United States has urged the Organization of Petroleum Exporting Countries (OPEC) not to take steps that “hurt our economy”, after the cartel surprised markets with a planned cut of 2.5 million barrels per day (bpd) to keep prices up.

The request, infused with warnings, was bitterly criticized by OPEC’s leading country Saudi Arabia, which accused Washington of “waging open war on the oil organization”. according to a Saudi paper Thursday, February 12.

“We hope producers do not take actions that hurt our economy,” White House national security spokesman Sean McCormack told Agence France-Presse (AFP).

“The United States believes oil prices should be set by market forces in order to ensure adequate supplies,” said McCormack.

The move to decrease the output - published Tuesday, February 10 on the last day of the OPEC meet in Algiers - could undermine U.S. President George W. Bush’s chances of a second term in office, as his administration is already facing a strong challenge from the Democrats over his handling of the economy.

The Bush administration is concerned that higher fuel prices will eat into disposable incomes, raise business costs and add to a $500bn (£267bn) annual trade deficit that is already undermining the dollar, the Guardian reported Wednesday.

The 11-nation cartel, which produces a third of the world's oil, said in a joint statement after a meeting in Algiers that it was reducing its “24.5 million bpd ceiling by one million bpd to 23.5 million bpd, effective April 1”.

In addition, production over this quota that had been stimulated by high demand and high prices is to be eliminated by the end of March, with the excess estimated at 1.5 million bpd, OPEC ministers said.

Oil prices immediately shot up after the news. The price of a barrel of reference Brent North Sea crude oil for March delivery climbed 66 cents from the previous close to 29.77 dollars in late trading in London.

Strong Commitment

The OPEC statement said there would be “strong commitment from member countries to comply with these agreed production levels”.

Saudi Arabia, the world's biggest oil producer, said the move was needed to prevent the price from plummeting as demand slackens in the west with the end of winter.

“The inventory, where it is now, is fine. We don't want to see it building. We don't want to see a precipitous fall in prices”, Saudi Oil Minister Ali al-Naimi said.

But the kingdom said that U.S. had no right to warn OPEC against cutting oil output and accused Washington of waging war on the cartel under the guise of protecting the global economy.

‘Open War’

Meanwhile, al-Riyadh Saudi daily said OPEC's decision was aimed at balancing supply and demand and that oil producers have made sacrifices to protect the global economy, including opening the taps during the U.S.-led invasion of Iraq to make up for a loss in Iraqi crude production.

In a strong warning to the cartel U.S. Treasury Secretary John Snow said any decrease in crude oil output by OPEC would be “regrettable,” and would effectively be a tax on U.S. consumers.

“The U.S. media campaign over production cuts is accompanied by U.S. problems in Iraq, high unemployment, rising debts and war costs and the elections battle, and the only scapegoat is accusing oil producers of harming the U.S. economy," the Arabic-language newspaper was quoted by Reuters as saying.

“America...made no secret of its strategy to rob OPEC of the right to protect its interests,” the daily said, adding that by encouraging oil exploration and production in non-OPEC states, Washington was waging “an open war on OPEC and oil producers, especially Arab countries which represent the strength of OPEC”.

Oil income make up around 70 percent of Saudi state revenue and around 40 percent of the country's gross domestic product.