Opec announces supply cut

10 September 2008

Heating oil customers could be faced with price rises in the future as Opec has announced a cut in supply.

There had been speculation that a meeting of the oil producing cartel would result in the cut, although many analysts did not expect it, Reuters reports.

But the group's president, Chakib Khelil, announced that those with output limits would be expected to adhere more strictly to them.

"I think if you do your own calculation properly, it will be a lowering of production by about 520,000 barrels per day," he said.

The move comes as Opec attempts to stem the recent fall in oil prices, which dipped below $100 (£57) yesterday having reached a record high of over $147 in July.

Opec intends to maintain a higher price by reducing supply over the next 40 days and the cost of a barrel rose by $1 immediately after Khalib's statement, suggesting heating oil customers should take advantage of the current low price.

Governors from Iran and Libya were among those leading the calls for a supply cut this week.

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