In a surprise move, OPEC agreed on Tuesday to cut excess production of crude oil at once and lower output quotas by 1 million barrels a day effective April 1. Oil prices rose in New York and London on the news, but the brief buying spree quickly lost momentum.
The Organization of Petroleum Exporting Countries (search) expects the combined cuts to curb its production by about 10 percent, or 2.5 million barrels a day.
OPEC members agreed to the two-stage output reduction in an attempt to keep oil prices stable when warmer weather is expected to erode demand in major importing countries.
"We are agreed that we will cut 1 million barrels from April 1," said Qatari oil minister Abdullah bin Hamad al-Ateiyah
White House responds to OPEC cuts Reuters News Service
WASHINGTON - The White House today responded to news of a surprise OPEC decision to cut oil output limits by saying it hoped the cartel did not take actions that hurt the U.S. economy.
"It is our hope that producers do not take actions that undermine the American economy and American workers, and American consumers for that matter," White House spokesman Trent Duffy said.
OPEC today agreed to the cut in oil output limits from April 1, a delegate said in Algiers, Algeria.
Duffy said the action underscores the need to pass Bush's stalled energy legislation, but conceded passage would not have an immediate impact.
"Had we passed an energy bill three years ago when the president called for one, we would have been in a lot better position to today to absorb market fluctuations of this kind," he said.
