ORAN, Algeria - The Organization of the Petroleum Exporting Countries agreed on Wednesday to make its deepest output cut ever to counter slumping demand and falling oil prices, said the group's Secretary-General Abdullah al-Badri.
The group is cutting 2.2 billion barrels per day from current output, which is about 4.2 million barrels per day reduction based on September production levels.
OPEC had cut 2 million barrels from its output four years ago, but that was done in two stages.
Saudi oil minister Ali Naimi had first mentioned a 2 million figure in Oran on Tuesday, the eve of the oil ministers' decision making meeting.
Oil producers fear a drawn-out lull in prices could hurt investment and lay the groundwork for another sharp price spike when the world's economy rebounds.
OPEC gave ministers ammunition to justify cuts in its latest monthly market report, released Tuesday. The bloc predicted demand for its crude oil will have fallen by 700,000 barrels per day this year, and will drop by at least twice that amount in 2009 as the worsening global economy "is expected to have a strong impact on oil demand."
Ahead of the decision, other OPEC ministers also expressed sentiment for a large cut to shock the market and put a floor under prices.
Shokri Ghanem, Libya's delegate to OPEC, said that "we should make a substantial cut" and that 2 million barrels was "a very good number."
Venezuela's energy minister, Rafael Ramirez, used similar language: "What is important is that there should be a consensus to cut production. A significant cut," he said. Ramirez added that Venezuela, a traditional price hawk, favors a cut of between 1 million to 2 million barrels per day.
Iranian Petroleum Minister Gholamhossein Nozari did not give a number, but said that Iran would support a reduction of 2 million barrels per day.
Still, while eager to push prices higher, OPEC must weigh production cuts against the risk of driving the economies of its top customers deeper into recession.
