OPEC said yesterday it will cut crude oil production by one-million barrels per day beginning September 1. The oil cartel’s decision is aimed at keeping prices around $25 a barrel as demand lessens in the U.S. and Europe.
“Considering the impact of the slowing world economy on oil demand and the relatively strong buildup of oil stocks, OPEC's objectives are to ensure market stability, satisfy world demand and avoid oil price volatility, in the interest of both producers and consumers,” OPEC said in a written statement.
President George W. Bush responded to the announcement by saying he understood the need to stabilize the energy market, but warned OPEC not to try to gouge customers.
“Obviously if it's an attempt to run up the price of oil, we'll make our opinions very clear and known that that would hurt America and hurt the marketplace,” Bush said. “Our economy is bumping along right now, and a run-up in energy prices would hurt. Surely the OPEC leaders understand that. I think they do.”
OPEC, which produces about 40% of the world’s oil, has already cut production by 2.5-million barrels a day this year. Its new production target will be 23.2-million barrels a day.