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OPEC Slashes Oil Production, Worrying U.S. & EU
VIENNA, July 26 (IslamOnline & News Agencies) - Both U.S. and European authorities have expressed concern that recent moves to cut global oil output could lead to a surge in energy prices, BBC Online News Service reported Thursday.
A European Commission spokesman said that a fair price for oil should be closer to $20 a barrel rather than $30, and that a planned supply cut by the OPEC producers' cartel would maintain an "unstable" price situation.
U.S. Energy Secretary Spencer Abraham also said that oil prices would be monitored "very closely" over the next few weeks.
On Wednesday, the world's leading oil producers agreed to take emergency action to push oil prices higher.
"Considering the impact of the slowing world economy on oil demand, and the relatively strong buildup of oil stocks, OPEC's objectives are to ensure market stability, satisfy world demand and avoid oil price volatility, in the interest of both producers and consumers," said an OPEC statement.
Several oil ministers have told news agencies that the cut is intended to hold oil prices near $25 a barrel.
The oil cartel has already cut production by 2.5 million barrels a day this year. A slumping U.S. economy, combined with rising petroleum stocks, has cut the demand for crude oil.
The statement said the ministers also voted to hold open the option of having an "extraordinary meeting soon if the market warrants it."
U.S. President George W. Bush and Abraham expressed immediate concern over the statement and indicated that the U.S. would be willing to break into emergency stock reserves in order to avoid a price spike, BBC's online service reported.
In its third cut so far this year, the OPEC cartel will reduce output by one million barrels a day beginning in September.
By cutting production and limiting supply, OPEC hopes to prop up the falling price of crude oil in international markets.
This will also have a knock-on effect on petrol prices at pumps throughout the world, increasing consumer discontent.
Bush on Thursday expressed concern about OPEC'S decision. "The U.S. economy is bumping along right now and a run-up in energy prices would hurt," he said.
"It's very important to have stability in the marketplace," Bush added, reflecting a view that OPEC itself holds.
European spokesman Gilles Gantelet said the Commission could understand the arguments used by producers, but regretted the lack of consultation between producers and consumers on the cut.
The move could affect fuel prices at the petrol pumps and further damage a fragile world economy, as it comes at a crucial time for oil refineries, which build up stock ahead of the northern hemisphere's winter period.
OPEC ministers, from Algeria, Iraq, Kuwait, Nigeria, Qatar, Indonesia, Saudi Arabia, Iran, the United Arab Emirates and Venezuela, were in round-the-clock talks since last week as the price of crude dropped below their preferred range of $22-$28 a barrel.
Cutting one million barrels a day, or four percent of output, would reduce supply to 23.2 million barrels a day, the group's lowest since April 1999 when tight curbs sent prices spiraling to $35-a-barrel, news agencies reported.
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