- The Washington Times - Tuesday, July 24, 2001

LONDON (AP) OPEC members yesterday were considering slashing their official crude production by at least 1 million barrels a day, fearful that a worsening economic malaise might drag oil prices lower.

An emergency meeting to decide such a cut could take place as early as next week, one source said.

The Organization of the Petroleum Exporting Countries said yesterday that its top official supports a cut which would be OPEC's third such move this year because faltering economic growth has led to an abrupt deterioration in the global outlook for demand for crude.

"There are many uncertainties in the market right now, including the present world economic performance, as well as supply and demand projections," OPEC Secretary-General Ali Rodriguez said in a statement.

"OPEC is taking a much more proactive role in monitoring market developments, and we feel there might be a need ahead of our ordinary meeting, scheduled for late September," he said.

Speaking later in Caracas, Venezuela, Mr. Rodriguez said OPEC ministers were weighing a cut of between 1 million and 1.3 million barrels a day. His comments followed a similar statement by Saudi Arabian Oil Minister Ali Naimi, who said Saturday that ministers were considering curtailing output by as much as 1.5 million barrels a day a figure that Venezuela would support, Deputy Oil Minister Jose Luis Pacheco said.

Mr. Naimi said Friday in Bonn that indications of growing oil inventories and sluggish demand raise the need for "drastic action to cut production." Saudi Arabia is OPEC's No. 1 oil producer, and oil prices surged on Mr. Naimi's comments.

OPEC, with an official target of 24.2 million barrels a day, pumps about 40 percent of the world's oil. Its ministers last met July 3 at their headquarters in Vienna, Austria.

Both Mr. Rodriguez and Mr. Naimi said OPEC members have yet to make a final decision on the size of a cut.

Oil futures rose on the news. September contracts of North Sea Brent crude rose 29 cents yesterday at $24.93 a barrel on the International Petroleum Exchange in London. Light sweet crude for September delivery rose 18 cents at $26.12 a barrel on the New York Mercantile Exchange.

OPEC said the price for its benchmark crude an average of seven different crudes fell last week by more than $1 to $23.07 a barrel. Saudi Arabia has said repeatedly that it wants to keep this price at $25 a barrel.

OPEC's 11 members are haunted by the consequences of their decision in late 1997 to boost production by 10 percent. The increase came just ahead of a recession in East Asia that caused demand for crude to plummet; by December 1998, oil prices had dropped to around $10 a barrel. The cartel's members subsequently slashed production to try to revive the price.

They succeeded, so much so that an outcry by the United States and other major importers led OPEC to reverse course and boost output four times in 2000 alone in an effort to keep prices below $28 a barrel.

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