OPEC's oil shock
http://www.economist.com/agenda/displayStory.cfm?story_id=2088615
Sep 25th 2003
From The Economist Global Agenda


OPEC has surprised the markets with an output cut of 900,000 barrels
per day, to take effect at the beginning of November. Observers had
expected the oil producers' cartel to hold its quotas steady because
production in Iraq has been hit by sabotage

BEFORE the regular meeting of the Organisation of Petroleum Exporting
Countries (OPEC) in Vienna on Wednesday September 24th, most of the
drama was provided by Hugo Chávez, the Venezuelan president, who
opined that the Iraq representative should not have been at the
get-together because he was an illegitimate stooge of American
occupiers. If that is so, Ibrahim Bahr al-Uloum behaved very oddly.
His bullish predictions that Iraq could produce at least 3.5m barrels
per day (bpd) by 2005 seem to have been among the factors that
persuaded the ten members of OPEC's quota system to approve a surprise
production cut of 900,000 bpd, to 24.5m bpd. The effect of the cut was
to send oil prices sharply higher. The futures price of West Texas
Intermediate, the American benchmark, leapt by $1.06, to $28.18.
Equities in America retreated on fears that a higher oil price could
stymie the incipient economic recovery: the Dow Jones Industrial
Average of 30 leading shares fell by 1.57% that day.

Ibrahim Bahr al-Uloum behaved very oddly.
His bullish predictions that Iraq could produce at least 3.5m barrels
per day (bpd) by 2005 seem to have been among the factors that
persuaded the ten members of OPEC's quota system to approve a surprise
production cut of 900,000 bpd, to 24.5m bpd. The effect of the cut was
to send oil prices sharply higher.