OPEC agreed yesterday to curtail oil supplies for the third time this year in a bid to lift crude prices back towards its $25-abarrel target. Ministers, in an agreement reached over the telephone, reduced output by a million barrels a day, or 4 per cent, from September 1st.
The tough new restrictions will reignite concerns among oil consuming nations about a renewed bout of energy price inflation when the world's industrialised powers are struggling to avoid recession.
US President Mr George W. Bush said he hoped OPEC was trying to do no more than stabilise prices. "A run-up in energy prices would hurt. Surely the OPEC leaders understand that. I think they do," Mr Bush said.
OPEC said in a communique from its Vienna headquarters the decision was taken in the interest of market stability after the slowing world economy had eased petroleum demand and helped build petroleum stockpiles.
But traders and analysts said the cutbacks were likely to force prices higher as refiners seek to build inventories heading into the peak winter demand season.
"This cut is a recipe for very high prices in the fourth quarter," said Mr David Johnson of Chase JF bank in Hong Kong. Benchmark Brent blend rose 47 cents to $25.34 a barrel. US light crude added 43 cents to $26.74.
