OPEC May Cut Output to Defend $80 Oil, Officials Say

(Bloomberg) — The Organization of Petroleum Exporting Countries may cut crude production when it meets next month to keep the price above $80 a barrel, oil ministry officials from four of the group’s nations said.

OPEC would trim output if prices slip to $80, according to one delegate, while another said $70 would be unacceptable to most members. Two of the four officials, who all asked not to be identified because such discussions are private, said if prices stay above $85 the group probably won’t change supplies at its next conference on March 5.


The combination of falling crude prices and the dollar’s 12 percent drop in the past year on a trade-weighted basis puts pressure on OPEC’s 13 members to reduce supplies as slowing economies in the U.S. and Europe threaten energy demand. Oil fell 30 percent and the group reduced production quotas three times in 2001, the year of the last U.S. recession.

“OPEC wants to protect $80 a barrel,” said Johannes Benigni, a managing director at Vienna-based consultant JBC Energy, who attended last week’s OPEC meeting when the group left its supply levels unchanged.

“I got the clear impression from OPEC that that’s the number they want to defend,” Benigni said. “It wasn’t OPEC’s fault it moved above $80, but now it’s there, they justify keeping it.”

Bloomberg