MercoPress. South Atlantic News Agency

OPEC surprises with deeper oil cut

OPEC, the producer of 40 percent of the world's crude oil, agreed to cut production by 1.2 million barrels a day to stem a three-month slide in prices.

The Organization of Petroleum Exporting Countries will make the cuts starting Nov. 1, United Arab Emirates Oil Minister Mohamed al-Hamli said following a meeting of member countries in Doha, Qatar. The reductions will be based on how much members are pumping rather than quotas, said al-Hamli, who will become OPEC president in 2007.

The producer group is trimming output to halt a 25 percent slide in oil prices since a record $78.40 a barrel was reached in New York in July.

''OPEC does not have a floor for prices,'' al-Hamli said at a press conference following the meeting, which ended after 1 a.m. local time in Doha. OPEC will cut production to 26.3 million barrels a day from 27.5 million in September for the 10 members with quotas, all except Iraq, he said.

Oil prices rose yesterday after Saudi Arabian Oil Minister Ali al-Naimi said the group would ''absolutely'' cut 1 million barrels a day.

Crude oil for November delivery rose 85 cents, or 1.5 percent, to close at $58.50 a barrel on the New York Mercantile Exchange. Prices have dropped 2.6 percent since the 1 million barrel-a-day cut was announced Oct. 5.

OPEC cut more than the planned 1 million barrels a day because ''We needed more to stabilize the market,'' Algerian Oil Minister Chakib Khelil said after the meeting. ''Everybody has a share, that is all I can say.''

OPEC may need to cut an additional 500,000 barrels a day when the group meets Dec. 14 in Abuja, Nigeria, Venezuelan Oil Minister Rafael Ramirez said. Venezuela's share of the current cuts will be 138,000 barrels a day, he said.

Oil has dropped amid a benign hurricane season in the U.S. Gulf of Mexico and as tensions have eased between the United Nations and Iran over the country's nuclear research program. Prices also slid as crude stockpiles in the U.S. increased.

Crude supplies surged 5.02 million barrels to 335.6 million last week, a U.S. Energy Department report showed yesterday. It was the biggest increase since March and left stockpiles 14 percent higher than the five-year average for the week.

Mohammed Barkindo, OPEC's acting secretary general, earlier called the U.S. build-up ''worrisome.''

''This meeting is going to determine whether OPEC does have any credibility,'' Phil Flynn, vice president of risk management at Alaron Trading Corp. in Chicago, said before the agreement was reached.

At its last meeting, on Sept. 11 at its headquarters in Vienna, OPEC left quotas for production by 10 of its members unchanged at 28 million barrels a day.

Last month, members with quotas pumped 27.6 million barrels a day, according to Bloomberg News estimates.

Earlier this week, OPEC reduced a forecast for how much of its crude the world will use this year by 200,000 barrels a day, to 28.7 million barrels a day. That compares with the 29.6 million barrels a day the 11-member group pumped last month, according to Bloomberg estimates.

''We will figure out how to divide the 1 million now,'' al- Naimi said before the meeting, when asked how OPEC will share the cutback.

''What is 33 percent of 1 million -- that is an excellent number,'' al-Naimi also said earlier, when queried how much Saudi Arabia would cut its production.

Saudi Arabia, OPEC's biggest producer, has already cut output to 9.1 million barrels a day from 9.5 million barrels, al- Naimi said. He didn't specify the time frame.

Iran expects talks within OPEC will resolve differences on how the producer group should enact an oil supply cut aimed at bolstering prices, the country's oil minister said.

The International Energy Agency, which advises 26 oil- consuming nations on energy policy, has warned against cuts that would keep prices high and threaten economic growth.