Opec to cut oil output this week

Venezuela's Chavez has been pushing for a steep Opec cut

With support from Russia finally in the bag, ministers from the 11-member cartel which controls 40% of the world's oil will cut production this week in an attempt to push up the price.

The plan for a 1.5m barrel per day (bpd) cut is likely to be given the nod on Wednesday, at the next scheduled Organisation of Petroleum Exporting Countries' (Opec) meeting in Austria.

The 11 countries in the cartel have put off making a production cut since the 11 September attacks on the US, fearing they will be seen as profiteering.

But with the price of oil stuck solidly below the $22-28 "collar" set by Opec as a fair target almost throughout the two months since then, the cartel is finally ready to move.

The trigger is the likelihood of support from non-members which produce oil, such as Russia, Mexico and Norway.

If they increase production to capitalise on the Opec cutback, the effect will be null and void.

Several Opec members, including Iran, say they will break any agreement to cut should that happen.

But on 9 November Russia's prime minister, Mikhail Kasyanov, said Russian oil companies were ready to cut crude oil exports voluntarily.

Russia is the world's third largest producer of crude oil, making up 9% of the world's total production.

That helped lift the price of Brent crude, one of the benchmarks of the oil market, to above $21.

Earlier this week, Brent crude hit a two-year low of $18.85.

"Just" prices

Venezuelan president Hugo Chavez broke the news in New York, speaking at a news conference outside the United Nations.

"In just four days, Opec will cut its output so oil prices can return to a just level," he told reporters on 10 November.

Inventories are building, he said, thanks to what he said was a world oversupply of oil of about 1.5m bpd.

Mr Chavez stressed that Opec was not taking advantage of the world situation, simply responding to events and ensuring member states did not have to carry all the weight themselves.

"Opec did not cause the world recession," he said.

Opec has cut production three times this year, reducing supply by 3.5 million barrels a day, or 19%.

Another cut would leave Opec output at its lowest since 1990.