Algiers (Platts)--23Mar2009

Algerian oil minister Chakib Khelil said Sunday that the 2.2 million b/d
OPEC production cut, which came into effect on January 1, had stabilized oil
prices and that $60/barrel by the end of the year is now possible despite an
anticipated 1.1 million b/d fall in demand.

Khelil, speaking on the sidelines of an energy and environment
conference, said that he expected the 11 OPEC members bound by production
quotas to tighten compliance by the time OPEC ministers meet in Vienna on May
28. OPEC secretary general Abdalla el-Badri said after the last OPEC meeting
on March 15 that all but 800,000 b/d of the overall OPEC cut of 4.2 million
b/d agreed last year had been implemented.

Khelil said that if there was no impact on prices even after the
additional barrels are removed, "we will take the decision needed to stabilize
prices" at the next meeting.

"We will apply our commitments and if we meet the 800,000 b/d cut, we
will see an impact on prices," Khelil said. "We have already started to see an
impact on prices because the cuts are already in the market," he said, adding
that some members were not able to implement the January agreement in time and
were now in the process of cutting supply further.

"By the time we meet in May, there will be 800,000 b/d less oil [on the
market] than there was the last time we met and this will have an impact,"
Khelil said.

OPEC agreed at last week's meeting in Vienna to maintain its production
targets but tighten compliance with the previously agreed reductions.

"Prices are stabilizing and have started to move up, due to the effect of
OPEC's decision to take out 4.2 million b/d from the market and in particular
the Oran meeting, which agreed a reduction of 2.2 million b/d," the Algerian
minister said, adding that the dollar's weakness had also pushed up the price
of oil.

However, the IMF has forecast a further weakening of the global economy,
which will see negative growth of -6%, a revision from 2.2%, "which means the
whole world will, on average, be in recession this year."

This would translate into a fall in average energy demand of 1.1 million
b/d this year and particularly during the second quarter, when demand is seen
falling by 1.2 million b/d, Khelil said.

"Despite all this, we have been able to stabilize oil prices and even
push prices higher. I have already said that we will see a price of $60/b by
the end of the year and I think that is now possible."
--Lies Sahar, newsdesk@platts.com