OPEC could cut production

MICHAEL THURSTON, Agence France-Presse, Vienna

The OPEC oil-producing cartel could cut production in response to slumping oil prices before expected U.S. military action, possibly as early as next week, its secretary general Ali Rodriguez said on Friday.

Rodriguez said the Sept. 11 terror attacks in the United States had worsened an already slowing global economy, likening the situation now to the 1998 Asian financial crisis.

"Even before Sept. 11 there was concern about the global economic situation. The situation has now deteriorated further," he told reporters in Vienna.

Crude prices have slumped in the wake of the terror attacks, as markets react to slowing demand from increasingly recession- hit economies around the world.

OPEC, which produces 40 percent of the world's crude, held its nerve last week at a ministerial meeting in Vienna, keeping its production quotas unchanged despite slumping revenues.

But pressure has grown on OPEC to do something to prop up prices, and Rodriguez said it may be forced to take action even if expected U.S. military action is not launched immediately.

"Maybe without military action we can make some decision," he said. Asked what such a decision might be, he said: "A cut in production is a possibility, but only one possibility."

Speaking on the sidelines of a speech on OPEC's role in the world economy, Rodriguez said OPEC ministers were "analyzing many factors" influencing crude prices. "But military action is not the only factor," he said.

Asked when a decision could be taken, he said: "We have a lot of contacts and surely in the next week we will announce some decision." But when pressed, he backtracked slightly, saying: "I cannot give you an exact date."

Rodriguez also said OPEC could meet before its next scheduled ministerial gathering on Nov. 14. "Maybe, if necessary, before," he replied when asked whether an earlier meeting was possible.

The OPEC chief also dismissed a report that OPEC and non-OPEC member states are due to meet in Madrid on Sunday.

According to the Internet edition of Spanish daily Expansion, delegates from Saudi Arabia, Iran, Algeria, Venezuela, Mexico, Norway and Russia were to have talks.

Asked if a meeting between OPEC and non-OPEC ministers were taking place in Madrid this weekend, Rodriguez said simply: "No."

Rodriguez appeared to downplay the possibility that the cartel's price-band mechanism would be triggered after this weekend.

Under the mechanism, a cut in production of 500,000 barrels per day will in theory be triggered if the OPEC basket price remains below US$22 for more than 10 trading days in a row.