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OPEC may cut oil quotas
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February 20, 2001: 6:17 a.m. ET
Economist believe an OPEC cut in oil production could damage world growth
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LONDON (CNN) - OPEC's deliberations to cut oil output in March could depress fragile world economies, commentators said on Tuesday.
Ali Rodriguez, the oil cartel's secretary general, said on Monday there was "almost a conviction" among its members to cut production ahead of a forecast drop in demand in the second quarter of the year.
"Any move could be counter productive for OPEC," Julian Callow, an economist at Credit Suisse First Boston, told CNN. "They need strong economies to maintain demand."
 OPEC's eleven members – Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela -- are heavily reliant on oil export revenues.
Callow predicts an OPEC cut could result in higher prices at the pumps, which could depress already weak consumer confidence. He said a $5 rise in the price of a barrel of oil would knock 0.25 percentage points from global economic growth, and boost inflation by 0.4 percentage points.
The Organisation of Petroleum Exporting Countries wants to avoid a repeat of a 1998 crash in oil prices, when a barrel of crude hit a low of $9.95, as a financial crisis in Asia began to bite.
OPEC, which produces 40 percent of the world's oil, cut production by 5 percent, or 1.5 million barrels per day, in January in an effort to maintain the price of a basket of its crudes between $22 and $28.
Rodriguez said "in the worst case scenario" OPEC may cut oil production by up to a million barrels per day in March.
 "OPEC is trying to micro manage the oil price at the upper end of the range," Peter Gignoux, an oil industry analyst at Schroder Salomon Smith Barney, told CNN.
Gignoux said OPEC is "trailing balloons" in an effort to reach a consensus among its members.
Analysts believe OPEC's decision to cut production in January was reached before the last meeting and was merely rubber-stamped at the January 17 meeting in Vienna. Analysts expect more debate between now and the March 16 meeting before the cartel comes up with a consensus.
Brent Crude for April delivery slipped 3 cents to $27.28 a barrel on London's International Petroleum Exchange on Tuesday. 
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