OPEC President Says 11 Members Agreed to Voluntary Cuts
GENEVA (AP) _ OPEC’s president said today that all but two of the cartel’s 13 members have pledged voluntary cuts in oil output, and that the group has set up a new committee to reach a binding agreement on lower production quotas.
The cuts are aimed at boosting sagging oil prices, which have fallen as low as $8 per 42-gallon barrel, down from $32 per barrel last December.
OPEC President Rinwalu Lukman, Nigeria’s oil minister, said the voluntary cuts totaled 1.925 million barrels a day. The Organization of Petroleum Exporting Countries produces about 20 million barrels daily, and Lukman had said he hoped for voluntary cuts totaling 2 million barrels.
OPEC production is estimated to exceed demand by about 2.5 million barrels daily.
Lukman said the voluntary cuts were an interim arrangement and would become superfluous if a binding agreement could be reached on lower quotas.
He called the pledges ″quite satisfactory,″ and refused to say which two members failed to promise voluntary cuts. The delegations from the United Arab Emirates, Iran and Iraq all have voiced strong opposition to voluntary reductions.
The OPEC ministers, who began meeting in Geneva on Monday, adjourned until Friday afternoon. However, Lukman said the new committee on quotas was starting its work immediately.
He said it was made up of himself, Indonesian Oil Minister Subroto and Algerian Oil Minister Belkacem Nabi. He said a fourth person also might join the committee, but did not identify him.
Lukman said that discussions for a new overall OPEC production ceiling would start with an Algerian compromise proposal for 17.6 million barrels a day or less.
At their last meeting in June, most OPEC members agreed the cartel should lower its total production to an average of 17.6 million barrels a day for 1986. Algeria, along with Iran, Libya and Gabon, has sought even bigger cuts in hopes of pushing oil prices up faster.
During a break in today’s session, Saudi Arabian Sheik Ahmed Zaki Yamani, asked if progress was being made, told reporters that it ″looks so.″
″We are now moving in two directions,″ he said, but did not elaborate.
He apparently was referring to the plan for voluntary production cuts and Algeria’s separate proposal for re-establishing an official price structure and binding quotas.
A high-ranking OPEC source, speaking on condition of anonymity, said Saudi Arabia, OPEC’s largest producer, had pledged under the voluntary plan to reduce its production by 800,000 barrels a day, to 4.6 million barrels a day.
The Saudi pledge assumes a current production level of 5.4 million barrels a day.
However, a report in the respected Middle East Economic Survey said earlier this week that Saudi Arabia’s daily output reached 6 million barrels.
Kuwait pledged to cut daily production by 350,000 barrels to 1.25 million barrels, and Nigeria was ready to go down to 1.5 million barrels daily, a decrease of 175,000 barrels, the source said.
Saudi Arabia and Kuwait had been blamed for creating the current world oil glut by boosting their production.
The prospect that OPEC might reach some kind of agreement helped boost oil futures prices.
On the New York Mercantile Exchange, contracts for September delivery of West Texas Intermediate, the main grade of U.S. crude, closed at $11.73 a barrel Wednesday, up 32 cents from Tuesday and 66 cents from Monday’s close.
The OPEC source said Wednesday that it was unclear whether voluntary cuts would be implemented if some countries refused to reduce production.