Newspaper article THE JOURNAL RECORD

United Arab Emirates Pledges 25% Cutback in Oil Production

Newspaper article THE JOURNAL RECORD

United Arab Emirates Pledges 25% Cutback in Oil Production

Article excerpt

GENEVA - A 25 percent oil production cut was pledged Tuesday by the United Arab Emirates, giving a modest lift to Organization of Petr oleum Exporting Countries hopes for agreement on a plan to drive oil prices higher.

The cut would bring the United Arab Emirates, one of the biggest OPEC producers, into line with the two-month OPEC production control accord that is due to expire Oct. 31.

No policy decisions were made on the second day of deliberations by the 13 OPEC member nations in Geneva, and officials said the talks could last several more days.

United Arab Emirates will cut its production from more than 1.2 million barrels a day to 950,000 barrels, said Oil Minister Mana Saeed Oteiba. That is the quota it was assigned but had ignored under the temporary OPEC accord. Each barrel includes 42 gallons.

The Persian Gulf nation's violation of the accord, acknowledged publicly for the first time Tuesday, was a major hindrance to OPEC negotiations on what to do about production when the current agreement expires.

Three other unidentified members also were reported to have exceeded their quotas, but by relatively small amounts compared with the violation by the United Arab Emirates.

OPEC wants to continue restricting its output as a means of driving oil prices up to $18 or $19 a barrel by the end of the year, said OPEC President Rilwanu Lukman of Nigeria.

The cartel's main problem lies in finding a way to divvy up an overall production ceiling among itsmembers.

Prices for oil were ranging between $7 and $12 a barrel in late July, when the OPEC ministers last met. It was their fourth effort this year to reach a production-limitation agreement.

Then, in early August, they announced that all members but Iraq would return to their 1984 quotas. Including 2 million barrels daily from Iraq, OPEC's targeted aggregate production dropped to 16.8 million barrels a day from an estimated 20 million-to-20.5 million.

Prices rose accordingly, and have hovered at levels ranging between $14 and $16 a barrel.

On the New York Mercantile Exchange Tuesday, crude oil settled 41 cents to 59 cents higher with the November contract at $15. …

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