OPEC restrains oil exports again

OPEC restrains oil exports again

VIENNA (Reuters): OPEC producers agreed on Friday to restrain
oil exports for the second time this year, slicing about one
million barrels a day -- near the upper end of expectations.

The Organization of the Petroleum Exporting Countries is
hoping the cutbacks will restore prices for its oil to US$25 a
barrel, equivalent to about $27 for international benchmark
Brent.

Ministers said mounting concerns about failing petroleum
demand because of a downturn in world economic growth had
convinced them to take tough action on supply.

"The context of this decision is uncertainty about the world
economy this year, above all about the north American economy and
its impact in Asia which we expected to be the main growth area,"
said OPEC Secretary-General Ali Rodriguez.

Saudi Oil Minister Ali al-Naimi said a formal announcement
confirming the exact size of the cutbacks would be made on
Saturday.

A million barrel-a-day reduction shaves limits for 10 OPEC
members, excluding sanctions-bound Iraq, by four percent to 24.2
million bpd.

Analysts said the magnitude of new curbs would put the heat
back under oil prices, off sharply from last year's 10-year
highs.

"A million barrel a day cut by OPEC is bullish because crude
stocks will decline substantially in the second quarter," said
consultant Gary Ross of PIRA Energy.

"But I can't imagine how there will be enough oil for the
second half when demand picks up again so prices inevitably will
move up sharply at some point to signal that OPEC should raise
quotas again."

London Brent blend gained 79 cents to $25.80 a barrel and U.S.
light crude added 73 cents to $27.28 as dealers reacted to news
of the deal.

Prices had slumped earlier this week, knocking OPEC's
reference basket of crudes down to $22.77, the bottom end of its
preferred $22-$28 target.

Iranian Oil Minister Bijan Zanganeh said non-OPEC suppliers
Mexico, Angola and Oman would help support oil prices with export
restraints of their own. There was no immediate confirmation from
those countries, in attendance as observers.

Small OPEC producers like Algeria and Indonesia had pressed
for an even more aggressive cut.

Moderate members, though, mindful not to choke off demand by
hurting economic growth among importing nations, were worried
about pushing prices too high.

"Economic growth in the short term is driven by consuemr
confidence and OPEC aims to reinforce this confidence by ensuring
stable prices," said OPEC President Chakib Khelil.

OPEC already had curtailed supplies by 1.5 million bpd in
January to counter a downturn in demand at the end of the
northern hemisphere winter.

The European Commission, representing some of OPEC's major
customers, called the cartel's efforts ill-timed given the signs
of slowdown in economic growth.

Oil importers fear a repeat of last year when the crude price
spike sent energy bills rocketing, fueling inflation.

Growing export levels from Iraq, outside OPEC's quota system
under United Nations sanctions, are expected to dampen the impact
of cartel restraints.

Baghdad says it is planning to lift exports under a U.N.
humanitarian program towards two million bpd this month from 1.3
million in February. It also has been smuggling increased
volumes, in particular to Syria through a recently refurbished
pipeline.