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Industry is braced for a rise in energy prices after the cartel of the major oil-producing nations last night agreed

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Industry is braced for a rise in energy prices after the cartel of the major oil-producing nations last night agreed to cut production for the second time this year. The OPEC has agreed to reduce production by 1 million barrels a day or 3.6 per cent of their daily supply. Oil ministers from the 10 member countries had debated a range of options ranging from 800,000 to 1.2 million barrels a day. Cartel president, Chakib Khelil said producers had agreed to cut about 1 million barrels a day but had still to settle the exact figure. Saudi Oil Minister Ali al-Naimi said Opec would announce the precise cut later today.Although the move had been widely expected, the oil prices surged almost 3 per cent on the news. A barrel of Brent for delivery in May jumped as much as 70 cents to $25.71. The market responded as it emerged the debate had shifted from a range to 500,000 to 1 million barrels, to a minimum of 700,000 and then again to 1 million.

At one point Ali Rodriguez, Opec's secretary general, said the cut could "considerably top" a million although analysts said he was probably referring to additional cuts by non-Opec members such as Mexico.Iran's oil minister, Bijan Namdar Zanganeh, said the exact size of the cut would be announced today. Yesterday's meeting in Vienna was held against a background of falling demand for oil across the globe, led by the United States, the world's largest consumer. Brent has fallen from a peak of above $30 as the sudden downturn in the American economy has pushed US industry into the doldrums.Opec was worried that its benchmark measure - a basket of crude prices - was now at $22.77, well below its target of $25 a barrel. Bruce Evers, an analyst at Investec Henderson Crosthwaite in London, said OPEC's debate was "very finely balanced".

"If they cut too much, they could plunge the world into recession. If they cut too little, they will suffer," he said.Lawrence Eagles, of GNI Research, said a steep cut in output could push prices higher towards the end of the year as cold weather returned."Certainly, if the US economy rebounds we would be setting ourselves up for a similar picture to last year when there was a squeeze on prices in the second half of the year," he said. "If Opec announces a cut above 1 million barrels tomorrow then prices will go up further," he added.A European Union official criticised Opec for trying to push up prices while world economies were struggling."We are not sure that it's the right time to [cut] and that there is sufficient reason to do it," said Gilles Gantelet, European Commission energy spokesman.While Western governments complain of high oil prices, OPEC nations have attacked importing countries for failing to slash energy taxes. In the UK, high taxes became the dominating political issue last autumn when hauliers protesting at high fuel prices brought Britain to a virtual standstill.

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