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Oil lifted by OPEC cuts, strike
LONDON, England -- Oil prices reached two-month highs on Friday as the world's largest petroleum exporters cut production and a crippling strike in Venezuela entered its 12th day. Brent oil for January delivery was up 43 cents at $27.30 a barrel at midday in London, following a 60-cent rise on Thursday. Crude has gained about $4 a barrel, or 15 percent, since early November due to the strike in Venezuela, which has halted nearly all tanker shipments from the world's fifth largest exporter. The threat of a U.S. war against Iraq, which could limit deliveries from that region as well, has also boosted prices. The Organization of Petroleum Exporting Countries, at a meeting in Vienna on Thursday, agreed to cut oil supplies and sought to restore market confidence in its system of quota limits by raising official output targets. The agreement means the cartel will aim to cut actual production by 1.5-1.7 million barrels a day -- or seven percent -- in the first quarter of 2003, while OPEC's formal ceiling would be raised to 23 million barrels from 21.7 million. Saudi Arabia, the world's biggest oil producer, had urged other OPEC members to back its plan to reduce excess supplies and maintain high prices. "It is reasonable to expect OPEC production to fall by about half a million barrels a day in January," Tor Kartvold, adviser on oil trading to Norwegian energy company Statoil, told Reuters. "That will be OK if there is war on Iraq but if Iraqi volumes remain in the market for the first quarter it will still be oversupplied." Oil prices were also supported by the general strike in Venezuela -- called on December 2 by those opposed to President Hugo Chavez's handling of the state-run oil industry -- leaving a backlog of more than 40 vessels anchored off the country's ports and cutting exports to a trickle. The U.S. Energy Department said it could lend crude from the national Strategic Petroleum Reserve to U.S. oil companies whose refineries are suffering a shortage of supplies from Venezuela, Reuters reported. Venezuela supplies 14 percent of U.S. oil imports.
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