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OPEC members delay decision on cutting oil production

November 30, 2008|Jeffrey Fleishman | Fleishman is a Times staff writer.

CAIRO — Ministers from OPEC member nations decided Saturday to delay until December a decision on cutting production to stem the decline of crude oil prices that have tumbled by more than 60% in recent months.

The meeting came as the global financial crisis and plummeting demand continued to suppress oil prices, which have dropped to about $54 from nearly $150 a barrel in July.

King Abdullah of Saudi Arabia, the leading producer in the Organization of the Petroleum Exporting Countries, was quoted by a Kuwaiti newspaper as saying that $75 a barrel was a "fair price."

But the decision to take measures to nudge prices up was postponed until an upcoming meeting in Algeria. OPEC President Chakib Khelil said the organization "agreed to take any additional action on Dec. 17 to balance oil supply and demand and achieve market stability."

The concern among members of the energy cartel, which decreased production in October by 1.5 million barrels a day, illustrates the shifting fortunes jolting the world economy. OPEC enjoyed record prices just a few months ago, only to have them evaporate as international markets spiraled downward, energy demand shrank and leading economies, including the U.S. and members of the European Union, neared or entered recession.

The Saudis want to see prices rise by at least $20 a barrel. Saudi Oil Minister Ali Ibrahim Naimi told reporters that OPEC would "do what needs to be done" to bolster prices.

"There is a good logic for $75 a barrel," he said. "You know why? Because I believe $75 is the price for the marginal producer. If the world needs supply from all sources, we need to protect the price for them. I think $75 is a fair price."

Qatar's oil minister, Abdullah bin Hamad Attiyah, told the Arab TV news channel Al Arabiya that sinking revenues would damage the oil industry's future, saying that if prices linger below $70 a barrel, "investment would freeze, which would lead to a crisis in supply in the future."

The organization's less-stable economic members, particularly Nigeria, Venezuela and Iran, are worried that months of low prices will hurt their national budgets.

There is also apprehension that some members may not comply with production quotas and will produce above the cuts.

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jeffrey.fleishman@latimes.com

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