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OPEC to cut its oil production

Unexpected move could raise prices for heating oil, gasoline

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VIENNA, Austria — The Organization of the Petroleum Exporting Countries unexpectedly agreed on Wednesday to cut oil production on Nov. 1, just as most of the developed world will be heading toward winter and demand for heating oil is likely to be rising.

Though the United States has been increasing imports, oil prices have fallen over the past few weeks. Commercial inventories of heating oil are healthy and government stockpiles are robust, but the sharp rise in crude oil prices after the announcement could translate into higher prices for heating oil and gasoline.

OPEC members, joined for the first time by representatives of post-Saddam Hussein Iraq, cited the still sluggish global economy, including a "jobless recovery" in the United States, as well as rising production at non-OPEC countries as the main reasons for their decision to trim output by 3.5 percent.

Going into the meeting, OPEC had been expected to keep production unchanged for now, because prices have eased only modestly in recent weeks, after remaining high after the war in Iraq. Members of the cartel were expected to curb production only next year, when Iraqi output is expected to increase.

After the move to trim OPEC's overall output ceiling by 900,000 barrels a day, to 24.5 million barrels, analysts said the decision might have been influenced by other, more political factors.

"This was a message to Washington: 'You can send a delegation to OPEC, but we control the oil price,' " said Mehdi Varzi, a private energy consultant in London.

The Bush administration, fearing the economic damage of higher oil prices, had successfully lobbied OPEC heavily before and during the war to keep supplies ample and prices in check.

While OPEC officially welcomed the Iraqi representative, Ibrahim Bahr al-Uloum, at least one member country, Venezuela, tried to block his attendance until the United Nations recognized an Iraqi government.

Over the long term, OPEC is eager to keep Iraq, which has the second-largest oil reserves in the world after Saudi Arabia, in the fold; the cartel has been losing market share and has watched its influence over oil prices wane since the 1970s.

OPEC's new overall quota of 24.5 million barrels per day — about one-third of the world's total — brings its official production ceiling back to the level that prevailed before a meeting in April.