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OPEC agrees oil cut
graphic December 28, 2001: 6:53 a.m. ET

Cartel to cut oil production by 1.5 million bpd
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  • OPEC
  • OPEC could cut 1.5m bpd to prop up oil prices
  • Russia to cut oil exports
  • OPEC defers oil cut
  • How crude oil hits the consumer
    CAIRO, EGYPT (CNN) - OPEC has said it will cut the cartel's oil output by 1.5 million barrels a day (bpd) starting from January 1 in a bid to lift prices.

    The Organization of the Petroleum Exporting Countries, meeting in Cairo on Friday, approved the reductions for six months to combat slack demand during  the  global economic slowdown.

    Oil prices have tumbled by a third from a peak of $29.84 a barrel in February as the slowdown dented demand.

    OPEC has also made a pact with the world's leading independent producers, including Russia, Norway and Mexico, for production cuts of 462,500 bpd from January.

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      graphic Qatar's Oil Minister, Abdullah Al-Attiyah talks with CNNfn about OPEC's move to boost oil prices.

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    OPEC had said in November it was prepared to implement its fourth round of production cuts in a year, but only if rival non-aligned countries that include Russia, Mexico and Norway,  also restrained output.

    The price of Brent crude contracts for February delivery rose 29 cents to $20.63 a barrel, after jumping by $1 Thursday on the International Petroleum Exchange in London.

    Consumers are unlikely to see an immediate effect in the fluctuation in quota and prices at the pump, because so many products are culled from crude oil, the effects of supply and demand are scattered far beyond motorists.

    Ministers will review policy at their next meeting on March 15.

    OPEC hopes to bolster prices back into the bottom end of its preferred target range of $22 to $28 a barrel. The cartel has successfully defended the price for 18 months before the September 11 attacks exacerbated the poor economic climate.

    OPEC, which pumps about a third of the world's oil, had said its move to slash output will be contingent on non-OPEC oil producers cutting their exports. Russia, Norway, Mexico, Oman and Angola have offered to cut by a combined total of 462,500 bpd.

    Non-OPEC countries were initially resistant to cutting output but the prospects of a price war concentrated minds. OPEC has lost share to the independent producers after implementing three production cuts this year.

    OPEC's 11 members -- Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the UAE and Venezuela -- hold more than 77 percent of the world's proven oil reserves.

    Last month, Russia disappointed OPEC when it offered a cut of just 50,000 barrels per day out of a production of more than seven million. Russia is the world's second biggest exporter after OPEC member Saudi Arabia.

    Norway, the third largest exporter, has offered to cut 200,000 barrels per day and Mexico has said it will cut 100,000 barrels per day. graphic



    OPEC could cut 1.5m bpd to prop up oil prices

    Russia to cut oil exports

    OPEC defers oil cut

    How crude oil hits the consumer