OPEC Announces Cut in Production
VIENNA, Austria (AP) _ OPEC announced Wednesday that it will trim its official crude oil production by 5 percent next month, a move likely to anger the United States and the rest of the cartel’s biggest customers.
The cuts, to take effect Feb. 1, are aimed at keeping crude prices firm ahead of an expected slowdown in U.S. economic growth and diminishing seasonal demand for refined products such as heating oil. Delegates of the Organization of the Petroleum Exporting Countries approved details of the cuts during a formal meeting at the cartel’s headquarters in Vienna, Austria.
The 1.5 million-barrel-a-day decrease in production is sure to disappoint the governments of many oil-importing nations. The United States and European Union had lobbied hard for OPEC to keep crude flowing at current levels, given their fears of U.S. economic fragility and a possible global recession.
Typically, a cut in oil output would raise crude oil prices and likely gasoline prices at the pump. But in this case the possible impact on consumers remains unclear, primarily because Iraq, an important OPEC member, continues to withhold the bulk of its crude from market.
Iraq is embroiled in a pricing dispute with the United Nations, which regulates all Iraqi exports. Although Iraq is an OPEC member, it has not participated in the cartel’s production agreements since the Persian Gulf War.