This is Bob Doughty with the VOA Special English Economics Report.
Last week, the Organization of the Petroleum Exporting Countries decided to reduce oil production by about four percent starting April first. Oil ministers from eleven member nations met in Vienna, Austria to approve the cut.
OPEC says low oil supplies are not the cause of current high prices. It blames oil market traders and world conditions. OPEC says oil supplies are increasing and it must take action. The organization says its goal is to keep prices between twenty-two and twenty-eight dollars a barrel.
The decision by OPEC comes at a time of record high fuel prices in the United States. In March, oil reached thirty-eight dollars a barrel. That is the highest price since the Persian Gulf War in nineteen-ninety-one.
More price increases will especially hurt the United States. This is because oil is traded only in dollars. Other countries exchange their money to buy oil in dollars. But recently, the value of the dollar has decreased against the euro and the Japanese yen. Europe and Japan can buy more dollars with their euros and yen. That means they can buy more oil too. This difference in the value of the euro, yen and dollar makes oil more costly for the United States.
Experts say OPEC nations will find it difficult to cut production. They point to the fact that OPEC countries already produce one-and-one-half million barrels a day more than the agreed limit. Experts say only Saudi Arabia could greatly cut production. This reduction would not meet the cuts required by OPEC.
Also, two of the top three exporting nations, Russia and Norway, are not OPEC members. These and other nations could increase exports to meet world needs. Still, OPEC's announcement has caused changes in the price of oil in recent days.
Oil, or petroleum, is the most actively traded product in the world. The biggest oil trading centers are in London, New York and Singapore.
Oil is sold by the barrel. A barrel contains one-hundred-fifty-nine liters. The International Energy Agency records the world's energy activity. It says oil provides about thirty-five percent of the world's energy. That is down from forty-five percent in nineteen-seventy-three. But oil remains one of the most important goods in the world economy.
This VOA Special English Economics Report was written by Mario Ritter. This is Bob Doughty.