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OPEC May Move To Prevent Price Crash

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AP
A Saudi official on Tuesday said oil exporting countries meeting in Vienna later this month may decide to reduce crude oil production.

Organization of Petroleum Exporting Countries members plan to hold an emergency meeting April 24 aimed at curbing runaway crude production to avert a possible price crash.

The Saudi oil official, speaking on condition of anonymity, said the kingdom will participate in the meeting with the aim of preserving oil market stability "to ensure the interests of producers and consumers."

The official told The Associated Press, however, that OPEC members may decide at the meeting to cut production quotas if oil prices keep falling.

Oil prices have fallen sharply since peaking at almost $40 a barrel on Feb. 27, before the outbreak of fighting in Iraq. May contracts of U.S. light, sweet crude fell to a low on Monday of $27.15 before rebounding to settle at $27.96 for the day.

Meanwhile, motorists are seeing the first drop in gas prices in four months due in part to falling crude oil prices because of increased certainly about Middle East oil supplies, an industry analyst said.

Gas prices dropped six cents a gallon nationwide over the past two weeks. It's the biggest two-week drop since October 2001, analyst Trilby Lundberg said Sunday.

The Saudi official denied that Saudi Arabia, OPEC's biggest member, is behind the dwindling prices.

Kevin Norrish, head of commodities research at Barclays Capital, said in London that Saudi Arabia has made "a massive increase" in oil production output.

The Saudi official said his country has been in touch with the main exporting countries inside and outside OPEC during the past two days with the aim of keeping prices between $22 and $28 a barrel.

OPEC's minimum threshold is set at $22.

Most OPEC members have been producing at maximum capacity to keep world oil supplies plentiful during the war.

However, oil ministers are increasingly worried that OPEC might be oversupplying the market just as demand starts falling to its seasonal low.

The Saudi official said the oil-rich Gulf state was "very worried" about the ongoing decline of oil prices due to supply exceeding the market demands.