Opec decides against further supply cuts

16 March 2009

There was good news for home heating oil customers this weekend as Opec members decided against implementing further cuts in crude production.

With global demand for the fuel faltering and oil prices having hovered between $40 (£28) to $50 a barrel over the past few weeks, the cartel had been expected by many to reduce supply to help revive the market.

However, Opec ministers resisted additional cuts and instead opted to focus on ensuring that the current supply curbs are fully adhered to by producers.

Venezuelan minister of energy and petroleum Rafael Ramirez told Reuters: "It makes no sense to propose a cut if previous agreements have not been fulfilled."

The cartel has imposed production cuts of 4.2 million barrels a day since September, but only 80 per cent of those cuts have so far been made.

Opec claimed that enforcing full compliance would reduce supply significantly and help to bolster oil prices without the need for further cuts.

This is likely to come as welcome news for home heating oil customers, who might have seen prices begin to rise significantly if the group had decided to reduce production again.

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