Fuel hike threat as OPEC cuts oil supplies

OPEC producers agreed a surprise cut in oil supplies yesterday that could raise fuel costs this winter and hamper economic growth.

Ministers decided to reduce output for 10 cartel members, excluding Iraq, by 900,000 barrels a day to new limits of 24.5 million bpd, said Kuwaiti Oil Minister Sheikh Ahmad al-Fahd al-Sabah. “OPEC will cut by 900,000 bpd from November 1,” al-Sabah told news agencies. The decision looks set to raise energy bills for oil-importing nations during the northern hemisphere winter.

“If oil prices continue to move higher, then interest rates in the G7 may need to be higher than they would otherwise be which is not good for recovery prospects,” said Paul Robson, economist at Bank One Corp in London.