BRUSSELS, Belgium -- Fearing the impact of falling energy consumption in a global economic slowdown, the Organization of Petroleum Exporting Countries decided Wednesday to cut oil production by one million barrels a day in a bid to drive crude prices back to $25 a barrel.
The decision by the cartel's 11 members marked the third time this year they have cut output in the face of sharply eroding demand from their principal customers in the United States, Europe and Japan. With the world's leading economies all suffering from anemic growth, oil consumption has been plunging much faster than anticipated.
Analysts said it was unlikely that the production cuts would translate soon into higher prices at the gasoline pump. Oil inventories have been rising rapidly in the United States from record lows reached last winter, providing a supply cushion that has helped stabilize gasoline prices at levels lower than expected this summer.
President Bush said he hoped that OPEC was not trying to orchestrate a sudden surge in prices that could destabilize industrial economies that are hovering on the brink of recession. Since taking office, Bush has been reluctant to exert much political pressure on OPEC to open up the taps and push down prices to boost growth in Western economies.
"Obviously if it's an attempt to run the price of oil up, we'll make our opinions very clear and known that that will hurt American and hurt the marketplace," Bush told members of Congress Wednesday at a White House meeting. "Our economy is bumping along right now and a runup in energy prices would hurt. And surely the OPEC leaders understand that. I think they do."
Oil prices ended the day slightly higher. The benchmark Brent blend rose 35 cents to $25.25 a barrel while the U.S. light crude added 57 cents to $26.88. Prices recently had slipped as low as $22 a barrel and analysts agreed that OPEC needed to take action or risk seeing prices drop below $20 a barrel.
The sudden nature of the OPEC decision, which was reached in a round of telephone consultations among the oil ministers, reflected fears among the producers that the slide in economic growth being felt around the world shows no signs of reversing and could leave a glut of oil on the market if they left their current output levels unchanged.
"Having suffered at the hands of the Asian economic crisis thirty months ago, when prices fell to $10 a barrel, OPEC is in no mood to take chances with its economic lifeblood of crude oil," said Gary Ross, a prominent oil market consultant based in New York. "OPEC means business and we will see growing evidence of tighter markets in the weeks to come."
The new quota will reduce OPEC's production to 23.2 million barrels a day, the lowest level since April 1999. The cartel has trimmed output by 3.5 million barrels a day since the start of the year.
In making their announcement, OPEC ministers said their objectives were "to ensure market stability, satisfy world demand, and avoid oil price volatility in the interests of both producers and consumers."
Analysts said the success of OPEC's strategy may depend on whether non-cartel members that produce large amounts of oil, such as Mexico, Norway and Russia, follow suit in curbing production. OPEC is responsible for producing about 40 percent of the world's oil.
If other countries do not curb output, OPEC members may be tempted to cheat on the new quotas. Jan Stuart, head of energy research for the Dutch bank ABN AMRO in New York, said the cartel may succeed in putting a floor under crude prices for the time being but it will need to show much greater discipline in sticking to prescribed quotas at a time when many now hold record levels of extra production capacity.
The International Energy Agency said that OPEC members have secretly been pumping about one million barrels in excess of their target.
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