Members of the Organization of Petroleum Exporting Countries have decided to cut oil output in an attempt to stem a slump in prices, the group said Thursday.
OPEC members discussed market levels at an emergency meeting in Vienna, and concluded that the second quarter of 2003 may face fuel oversupply.
Crude oil prices have slid in recent weeks. To curb this trend, the group agreed to cut production by 7%, or 2 million barrels a day, as of June 1. OPEC members also raised their official output ceiling to 25.4 million barrels, an extra 900,000 barrels a day above the current target.
Members said the group intends to "closely monitor ... the expected recovery in Iraqi oil production and its impact on the overall balance in the market."
The group said it based its decision on economic weakness, lower seasonal demand and the impact of severe acute respiratory syndrome, or SARS, on oil consumption.
Abdullah bin Hamad Al-Attiyah, president of OPEC, said Thursday's decision represents a cut of 1 million barrels a day for Saudi Arabia, the group's largest member. He also said other cuts could take place when the group meets again June 11, in Doha, Qatar.
In late trading, light crude was down 2.3% at $26.05 a barrel on the New York Mercantile Exchange, while benchmark Brent was trading 1.6% lower at $23.97 a barrel in London.
In a sign that some oil companies had benefited from the prewar rise in oil prices, independent oil and gas explorer
said Thursday that its profit and revenue jumped in the first quarter, and it raised its second-quarter earnings estimates.