Newspaper article THE JOURNAL RECORD

Oil Independents' Export Pact to Bolster Short-Term Prices

Newspaper article THE JOURNAL RECORD

Oil Independents' Export Pact to Bolster Short-Term Prices

Article excerpt

LONDON - An agreement among independent oil producers to cut their oil exports unilaterally by an as-yet-unspecified amount during the second quarter will help the Organization of Petroleum Exporting Countries bolster oil prices in the short-term, analysts say.

But the agreement, reached Tuesday at a one-day meeting in London, will have little impact on the buoyant supply and weak demand in the oil market, the analysts said.

``I think it means the extension of the oil producers' cartel, even if the countries don't want to commit themselves to OPEC at this stage,'' said Philip Morgan, an oil analyst at the London investment firm Citicorp Scrimgeour Vickers.

The group of independent oil producers said that a majority of its members agreed to cut their oil exports, but it didn't identify them, nor did it say by how much. Other participants agreed to freeze their exports, it said.

``Specific announcements with respect to the above decisions will be made by the respective authorities in the course of next week,'' the group's communique said.

Participating at talks at the Mexican Embassy were Mexico, Oman, Malaysia, Egypt, China, and Angola, the communique said. Also attending were observers from the Soviet Union, Colombia, North Yemen, Norway, the U.S. state of Alaska and the Canadian province of Alberta, it said.

The agreement ``is fairly significant,'' Morgan said.

It was important that the independent producers were acting unilaterally, analysts said, doing so because the Organization of Petroleum Exporting Countries has managed to curb its production.

Last year, independent oil producers offered to cut their output by 5 percent if OPEC agreed to reciprocal cuts. OPEC refused.

Some OPEC members have expressed resentment that independent producers enjoy the benefits of the cartel's production limits without making a contribution.

OPEC's 13 members are estimated to be producing about 19.5 million barrels a day, 1 million barrels above their agreed production limit but well below their fourth-quarter output. …

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