Opec to cut production as oil price falls below $100

Production cartel Opec announced today it planned to curb output by more than half a million barrels as oil prices slid to their lowest levels since April.

Opec members released a statement after their regular six-monthly meeting in Vienna saying the organisation had agreed to produce 28.8 million barrels a day - a cutback of 530,000 barrels a day.

The move is a compromise meant to avoid new turmoil in oil markets while at the same time reflecting Opec's attempts to prevent prices from falling too far.

October Brent crude fell by US$4.14 to US$99.30 a barrel yesterday on London's ICE commodities exchange, slipping below $100 for the first time since the beginning of April.

Light, sweet crude traded on New York Mercantile Exchange - the world's benchmark crude price - also dropped to a level not seen since April, falling by more than $3 a barrel to settle at $103.26.

Saudi Arabia, which accounts for around a third of Opec output, signalled before the Opec meeting that it was happy with the current oil situation.

Oil minister Ali Naimi told reporters in Vienna: "The market is fairly well balanced. I think things are in balance, in a healthy position."

But Iran's oil chief, Gholam Hossein Nozari, suggested otherwise after telling the media: "We believe the market is oversupplied."

Oil prices have fallen nearly 30% from the $147 high seen in July as projections of slower global economic growth have dampened demand.

Last month the International Energy Agency forecast that OECD oil demand would contract to 48.6 million barrels per day this year and then fall to 48 million in 2009.

OPEC nations have around two-thirds of the world's known oil reserves, and account for 40% of the world's oil production. Other members include Iraq, Venezuela and Indonesia.