The Interational Energy Agency said Thursday the OPEC decision to cut oil production by 1.5 million barrels per day will have a "moderate" impact on the markets but the agency remains concerned about a measure which can only increase their volatility.
"These types of unilateral measures to stabilise price on the oil market only increase their volatility," said Robert Priddle, the group's executive director.
Traditionally, the second quarter of the calendar year allows importing countries to rebuild their stocks but the cut in production announced Wednesday "will make it all the more difficult to reconstitute stocks ... and low stock levels contribute to the volatility of the market, which is neither in the interest of producers nor consumers," Priddle said.
Nevertheless, the OPEC decision was largely expected, "with crude oil prices already factoring in the rise," he added.
In any case, the OPEC countries had already kept their level of production below their stated aim of 26.7 million barrels a day, Priddle said.
The new quotas, which will come into force from February 1, will bring total OPEC production down to 25.2 million barrels per day.
The quotas cover the output of 10 of OPEC's 11 members. Iraq has been excluded from the system since UN sanctions were imposed on it over the 1991 Gulf War.
Priddle pointed out that Iraq's crude oil exports, which have been relatively modest, were expected to rise, and with winter in the northern hemisphere already well under way, demand for domestic heating oil will fall off.
The consequences of the output decisions will not be felt before the spring, when demand will essentially become focused on fuel needs for the transport industry, he said.—AFP.
©--Agence France Presse 2001.
© 2001 Mena Report (www.menareport.com)
