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OPEC chiefs agree for deep output cut

OPEC energy chiefs gathered on Wednesday to rubber-stamp a deep cut in production in an effort to boost faltering prices, much to the dismay of oil importers in Asia, Europe and the United States.

Oil ministers from the 11-nation Organisation of Petroleum Exporting Countries agreed to slash output by at least 1.5 million barrels a day during informal talks.

"We are all done," said Saudi Arabian oil minister Ali al-Nuaimi early on Wednesday. "It's just a formality now."

He said that the 1.5-million bpd output cut, equivalent to more than five per cent of total OPEC production, would help restore a balance of supply and demand on the market.

Recent signs of a supply glut have sent London futures tumbling from highs above 35 dollars a barrel in October to around $25 in January. Prices have drifted gently higher in recent sessions, though market traders say a 1.5-million bpd cut has already been factored into prices.

But oil-consuming countries have urged OPEC not to close the taps, fearing that higher prices will filter through, stoking inflation, hurting corporate profits and generally undermining world economic growth.

"Anything above a million and a half would be very aggressive towards the western economies -- towards the world's economies," said Peter Gignoux, a London-based oil trader with Salomon Smith Barney.

The actual volume of the cut has been the worse kept secret here, though some senior OPEC officials are still suggesting it could be slightly higher than the promised 1.5-million bpd cut.

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