Sunday, March 15, 2009

OPEC calls for end to overproduction

Updated at: 1750 PST, Sunday, March 15, 2009

VIENNA: OPEC ministers have called for an end to overproduction by some members as they sought to slice nearly a million barrels per day from world supply and boost prices but without further shocking the anemic global economy.

Their comments suggested that Sunday's oil ministers' meeting of the Organization of the Petroleum Exporting Countries might opt for a call on all members to honor production quotas, instead of deciding to slash output outright.

Most members of the 12-nation organization had been clear in favoring reduced output in the days preceeding Sunday's full meeting of the Organization of the Petroleum Exporting Countries.

Still they had left open whether they want to lower output quotas or if they favor a solution less likely to hurt the struggling global economy by simply seeking to end overproduction by some nations above levels allotted to them.

Algerian energy and mines minister Chakib Khelil called for both on Saturday.

“Comply and cut,'' he told reporters asking what he preferred. But recognition that direct cuts could backfire appeared to prevail on the eve of the meeting.

While slashing production could raise prices in the short term, it could also lead to further depressing demand, as strugglingeconomies cut back on pricey crude they cannot afford. Pushing forfull quota compliance instead would be less harmful.

OPEC cuts agreed on since September were meant to take a daily 4.2 million barrels off the market. But the 11 members underproduction quotas are still overshooting their joint daily target level of just under 25 million barrels by about 800,000 barrels a day.

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