Newspaper article THE JOURNAL RECORD

OPEC Agrees to Oil Production Cuts / Considered Crucial to Reversing Oil Price Slump

Newspaper article THE JOURNAL RECORD

OPEC Agrees to Oil Production Cuts / Considered Crucial to Reversing Oil Price Slump

Article excerpt

GENEVA - Unanimous agreement was reached Monday night by the 13 oil ministers of the Organization of Petroleum Exporting Countries on Iran's proposal for a drastic production cut to raise prices, cartel President Rilwanu Lukman said.

Lukman, who also is the Nigerian oil minister, gave no details.

""You'll hear all about it Tuesday,'' he said as he emerged from a Geneva hotel following the late-night meeting among OPEC ministers. Another meeting was scheduled Tuesday.

Saudi Arabia, the cartel's biggest producer, had remained among the few final holdouts. Iran's Oil Minister Gholamreza Aghazadeh had said earlier he was very optimistic about the production cut plan.

Oil industry analysts consider a unanimous agreement by OPEC members on production cuts crucial to reversing a worldwide slump in prices, which have dropped from $32 a barrel late last year to as low as $7.35 for some grades.

By not requiring production cutbacks from Iraq (Iran's enemy in the six-year-old Persian Gulf war), Iran appeared to remove a major stumbling block to the quota-sharing agreement OPEC has been vainly seeking for years.

The plan would be effective for at least two months, when the ministers could meet again to discuss the price structure, Aghazadeh said.

Aghazadeh said he offered the proposal to the OPEC oil ministers' conference on Sunday.

The plan seeks a return to the same quotas used in October 1984. If approved, it would bring OPEC's combined output for 12 countries to 14.8 million barrels a day, the Iranian said.

Including Iraq's output, the combined production would total about 16.7 million or 16.8 million barrels a day under the plan, he said. OPEC's current output is about 20 million barrels a day, intensifying a world glut.

Iraq would be free to produce as much as it wants, Aghazadeh said.

"We can control Iraq's production by ourselves,'' he said.

The events came as OPEC oil ministers entered the second week of talks in their fourth attempt in recent months to reach an agreement on lowering output and boosting prices. …

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