CAIRO – OPEC oil exporters this week will announce output cuts of 1.5 million barrels a day after getting satisfactory commitments from rival independent producers to join the curbs, Saudi Oil Minister Ali al-Naimi said on Wednesday.
Asked if the Organization of the Petroleum Exporting Countries would announce the reductions at an emergency meeting in Cairo on Friday, Naimi told Reuters: ``Yes, we will.''
Naimi's comments put to rest the threat of a price war between OPEC and non-aligned producers which stood accused by the cartel of taking a free ride on three rounds of curbs already implemented this year by OPEC.
U.S. light crude futures by late morning in New York rose $1.04 to $20.66 a barrel, valuing an OPEC basket of crudes at about $18.50.
Kuwait's Oil Minister Adel al-Subaih also said the supply cuts would be ratified by OPEC, which agreed in November to the restrictions on condition that non-OPEC producers contributed their own reductions of 500,000 barrels per day.
Naimi said there should be no doubt that non-OPEC oil producers, led by Russia, Mexico and Norway, now would deliver on pledges to curb supplies in an unparalleled alliance with OPEC.
``It is certain that they will carry out their pledges and that OPEC will comply with the cuts,'' the Saudi minister said on his arrival at the Cairo hotel venue for the meeting.
OPEC, which controls nearly two-thirds of world exports, has already cut supply by 3.5 million barrels a day this year and was worried it was losing market share to non-aligned suppliers.
Oil prices had fallen from nearly $30 for U.S. crude since the September 11 attacks darkened an already gloomy economic outlook, hitting petroleum demand.
10-YEAR LOW FOR OPEC OUTPUT
The new curbs will cut output for 10 OPEC producers to 21.7 million bpd, down five million bpd or 19 percent in a year, putting production by the cartel at its lowest for 10 years.
OPEC member Iraq, bound by U.N. sanctions, produces at will.
Non-OPEC producers at first resisted OPEC pressure to join the restrictions but began to relent when, shortly after OPEC made clear its demands, prices slumped to little more than $17 for U.S. crude.
Naimi said the new supply limits would be designed to lift prices back to $20-$25 a barrel for a basket of OPEC crudes, or about $22-$27 for U.S. light crude.
He said it would be difficult, given current slack economic conditions, to lift prices back into OPEC's preferred target range of $22-$28 a barrel for OPEC oil. But he said that goal could be reached ``in due time.''
The reductions, which will take effect from January 1, will initially be imposed for six months although the group is already scheduled to meet again in mid-March.
``The cuts should last as long as is required to stabilize the market,'' said OPEC Secretary-General Ali Rodriguez. ``I cannot say if it will be six months or longer than that.''
``Once we have achieved a few months of stable prices we will decide what to do next -- either to continue the measures or modify them,'' he added.
OPEC has delayed the final go-ahead on its latest restrictions for fear that Russia, its main rival and the world's second largest exporter, would not deliver on its promises.
But a Gulf oil source said cartel officials now were satisfied with the pledges by non-OPEC countries, even though they fell slightly short of the 500,000 bpd target.
``A shortfall of 20,000 or 30,000 barrels a day is not a big deal,'' the source said, adding that the cut aimed to avoid a stock build in the second quarter of 2002, when demand typically eases after the winter season.
Russia and Norway each have promised to slice 150,000 bpd, Mexico 100,000 bpd, Oman 40,000 bpd and Angola 22,500 bpd. That gives a total of 462,500 from the non-OPEC group, just short of the 500,000 bpd originally sought by OPEC.
The Gulf source said OPEC ``has no doubt whatsoever'' that Russia would stick to its word and curb supplies for six months.
``The Russians are very serious. They took a long time to make a decision. We have no reason whatsoever to doubt them,'' the source said.