Vienna, 25 June 1998 (RFE/RL) -- Fighting the weakest oil market since 1986, OPEC said today it will slash production - even though ministers acknowledged prices will not rise instantly.
At the meeting in Vienna, OPEC said it will withdraw more than 185,000 tons of oil from the market every day beginning July 1.
The cuts will augment an earlier round of supply reductions that failed to reverse the damage OPEC itself created by deciding in the Winter to pump more oil.
The oil cartel hopes that the latest measures, which are aided by nearly 28,000 tons in daily production cuts from non-OPEC members Mexico, Russia, Oman and Egypt, finally can end their financial nightmare.
Itar-Tass new agency today said Russia's portion of the daily production reduction would be about 14,000 tons. The USSR had been the world's largest oil producer. Russia is generally ranked as the world's second or third largest producer.
Russia's decision to participate in the reduction came as a surprise, as the country - taking part in its first OPEC conference - had announced before the meeting that it would refuse to reduce production, as Moscow could not afford the resulting jobs reductions, and has virtually no storage capacity for the surplus oil.
Russian Fuel and Energy Minister Sergei Generalov, who represented Russia at the OPEC meeting, had said that Russia would not follow in OPEC's wake, and did not intend to reduce the volume of its own extraction or of export deliveries.
OPEC president, United Arab Emirates Oil Minister Obaid bin Saif
al-Nasseri, vowed that the new reductions will "banish the volatility so plaguing the market." OPEC said its new production levels will stay in effect for one year.
Kuwait's Oil Minister, Sheik Saud Nasser al-Sabah, said he would even consider further production cuts if prices do not respond, an idea echoed by his Algerian counterpart, Youcef Yousfi.
OPEC ministers met informally Wednesday, and thought they had a deal, until last-minute questions about Iran's likely compliance forced some quick haggling that delayed the formal start of the group's Summer meeting until late in the night.
Iran's Oil Minister Bijan Namdar Zangeneh assured his OPEC counterparts that his production reductions - 26,000 tons - will be real.
OPEC delegates said the cutbacks would be led by the Saudis, who are chopping about 58,000 tons a day from their production. Venezuela has promised to cut more than 44,000 tons a day. Kuwait, the United Arab Emirates and Nigeria each pledged to reduce production by about 14,000 tons daily, with smaller reductions by OPEC members, which produce less.
World oil supplies are now so glutted that OPEC acknowledged its plan to withdraw more than 185,000 tons a day from the market is not likely to have an immediate impact. Observers says OPEC made an ill-judged decision last November to raise its output, just as the economic crisis in Asia was starting to choke off the growth in global oil demand.
OPEC's new round of reductions - following an earlier batch in March that failed to improve depressed markets - would put the group's total output at around 3.6-million tons a day, said the OPEC secretary-general, Rilwanu Lukman of Nigeria. That would be around 68,000 tons less than OPEC was pumping before its most influential player, Saudi Oil Minister Ali Naimi, pushed through last year's plan for higher production.