Vienna, Austria OPEC members have agreed informally to cut their oil exports by 5 percent, Saudi Arabia's oil minister said Tuesday, a widely anticipated move aimed at keeping prices firm ahead of slower seasonal demand for refined products.
Saudi oil minister Ali Naimi told reporters that members of the Organization of the Petroleum Exporting Countries had reached a consensus to cut production by 1.5 million barrels a day, effective Feb. 1.
Saudi Arabia is OPEC's largest producer and plays a leading role in formulating the cartel's production policy. OPEC delegates were to announce details of the decrease in production today, when they planned to meet formally to reassess their current output quotas.
"The cut is not going to have a negative impact on consumers," predicted Leo Drollas, chief economist of the London-based Center for Global Energy Studies.
Perhaps the biggest wildcard for consumers and OPEC alike is Iraq, an important cartel member, which continues to withhold the bulk of its crude from market. Iraq is embroiled in a pricing dispute with the United Nations, which regulates all Iraqi exports.
Iraq has not participated in the cartel's production agreements since the Persian Gulf War, and OPEC members said they aimed to trim output regardless of what Iraq does.
However, Saudi Arabia and Qatar suggested that OPEC members would make up for any shortfall created by an Iraqi withdrawal from the market, thereby helping to contain any surge in prices.