Oil output cut 'probable'

Saudi Arabia: Opec concensus emerging for a supply cut

Members of the oil producers cartel Opec are likely to decide to cut production when they meet in Vienna on 17 January, despite a recovery in oil prices, the organisation's secretary general says.

Former Venezuelan energy minister Ali Rodriguez said the cut was "probable" because there was still a build-up in oil stocks that was worrying organisation members.

In London, the price of the world benchmark Brent crude oil climbed 33 cents to $25.68 a barrel by early afternoon.

Under an informal Opec price stability agreement, output would be cut by 500,000 barrels a day if the basket price stayed below $22 for more than 20 consecutive working days.

Non-Opec to help

"Everything indicates that it will be necessary to make a cut, but the amount is difficult to predict as it must be decided unanimously among Opec members," Mr Rodriguez said.

Non-members such as Kazakhstan, Mexico, Oman, and Russia would work with Opec to cut supplies, he said

An official from Saudi Arabia, the world's leading oil producer and exporter, said a consensus was emerging to curb output by 1.5 million barrels a day, or more than 5%.

Prices have surged on signals about a substantial cut in production, with February crude on the New York Mercantile Exchange (Nymex) price rising 14 cents to $28.14 on Thursday, a $2.50 or 9% gain over the last four days.

Nymex oil prices in 2000 averaged $30.20 a barrel, the highest level since 1983, and well above the 1999 average of $19.25.

US urges no change

The United States energy secretary, Bill Richardson, is meeting Mr Rodriguez in Vienna this weekend to urge Opec to leave oil supplies unchanged.

Crude oil prices have been supported by cold weather in the US, which has boosted demand for refined products such as heating oil.

Oil prices traditionally fall as the weather in the US and northern Europe warms.