Opec, the oil exporters' cartel, is expected to press ahead with hefty cuts in crude oil production at its summit in Vienna this week, despite a last minute tour of the Gulf states by US energy secretary Bill Richardson. Kuwait's oil minister, Sheikh Saud Nasser al-Sabah, who is regarded as price "hawk" within the 11-member cartel, was quoted over the weekend as saying that an output cut of at least 1.5m barrels per day was now "agreed".
Mr Richardson held meetings in Qatar and the United Arab Emirates yesterday after a visit on Saturday to Saudi Arabia, where he said that although the Americans anticipated some cuts "we believe that it is important that they are not steep cuts".
Washington would be happy with an oil price of around $25 (£16.90) per barrel, but traders have already pushed market prices back above $30 per barrel for the first time since early December in anticipation of action by Opec. Late on Friday, the February futures price for crude jumped 64 cents to $30.05 in New York, a rise of 12% so far this year. In London, the spot price for Brent crude ended the week at $25.78 per barrel.
"Our strong message is that there should not be steep production cuts at the next Opec meeting because that will spur a price hike that is unhealthy for the world economy," Mr Richardson said. His plea coincided with comments from the former Saudi oil minister Sheikh Yamani, who warned this weekend that aggressive action by Opec was likely to push the US deep into recession.
The sheikh has claimed that Saudi Arabia alone has already taken steps to cut its production by 500,000 bpd and that these measures, coinciding with a suspension of Iraqi exports, will lead to a sharp spike in the price in the second half of January.
Some Opec ministers, who meet on Wednesday, have argued that production cuts of between 2m and 3m bpd are necessary to avoid a sharp decline in oil prices.
