1998 News Story

Kingdom announces reductions in oil production
The Kingdom of Saudi Arabia, together with Mexico and Venezuela, today announced further reductions in the production of crude oil in order to further bolster the international oil market. A joint press statement to this effect was issued by the three countries, the text of which follows.

"The Riyadh Agreement of March 22, 1998, brokered by the oil ministers of Mexico,  Saudi

Arabia and Venezuela, and the subsequent reductions in production aimed at supporting the

market that were announced by the three countries and by other oil exporters, both OPEC and

non-OPEC, marked an important milestone in cooperation and resolve among producers.  The

market response to the announced production reductions by seventeen oil exporters was

positive.  Since then the oil ministers of Mexico, Saudi Arabia and Venezuela have continued

their consultations and market analyses.  With a view towards building on the existing spirit of

cooperation and to enhance market stability, the three ministers met in Amsterdam on June 4,

1998 to review the market situation and its future outlook.  They noted that despite efforts by

their countries and other exporters to restrain production along the previously agreed pledges

of reductions, the market is still unbalanced and stocks of both crude and refined are high by

historical standards.  These excessive stocks need to be reduced to bring the market to balance

and prices to acceptable levels for the health of the world economy, for the maintenance of

sustainable growth in the oil industry, and for the benefit of producers and consumers.
To this end, they agreed that their countries would contribute to this endeavor by a further

reduction of 450,000 barrels per day, distributed as follows:  Saudi Arabia, 225,000 b/d; 

Venezuela, 125,000 b/d;  and Mexico, 100,000 b/d.  This reduction is over and above the base

volume of the Riyadh Agreement of March 22, 1998, and will come into effect on July 1, 1998. 

The three countries are confident that other producers will join in this effort to stabilize the

market.  Accordingly, they will consult with other oil exporters, both OPEC and non-OPEC,

ahead of the upcoming meetings of the oil ministers of the Gulf Cooperation Council (GCC)

countries on June 16, and the OPEC ministerial meeting on June 24."