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OPEC says it won't reduce oil output levels

But the organization says some members exceeding their quotas will be asked to end overproduction.

March 16, 2009|Associated Press

VIENNA — OPEC oil ministers said Sunday that they would stick to present output levels but seek to end overproduction by some members.

The decision means there will be no cutbacks from production levels established in December. It also translates into pressure on members of the 12-nation Organization of the Petroleum Exporting Countries that are exporting more oil than their quotas.

The 11 members with production quotas are overshooting their joint daily target level of just under 25 million barrels by about 800,000 barrels a day.

Russia announced earlier that it was cutting oil exports -- welcome news for OPEC oil ministers looking for ways to bolster prices by reducing supply without further hurting the global economy.

Slashing production could raise prices in the short term, but it could also lead to further reductions in demand as struggling economies cut back on expensive crude they cannot afford. Pushing for full quota compliance instead would be less harmful.

Cuts agreed on since September were meant to take 4.2 million barrels a day off the market.

Prices have rallied from below $35 a barrel last month, with a barrel of benchmark crude fetching more than $46 a barrel on the New York Mercantile Exchange on Friday. Earlier in the session, prices peaked at $48.14.

Russia is the world's second-largest producer of crude -- after Saudi Arabia -- and OPEC in recent months has repeatedly called on the Russians to cooperate as the organization seeks to bolster prices that fell to the low $30s a barrel after summer highs close to $150.

Russia will "be cutting oil exports while increasing domestic consumption and expanding oil refining, said Russian Deputy Prime Minister Igor Sechin, adding that his country also would delay the development of two oil fields.

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