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Opec took pre-emptive action to protect prices

Nuaimi, in an interview with the industry specialists in Algiers after the group met on Tuesday, noted that Opec data predicts a reduction in demand or surplus of three million bpd in the second quarter and the International Energy Agency foresees a three-four million bpd reduction.

"So the quandary was: what do you do, do you wait until you have a huge build-up in inventory and have a precipitous price fall or do you take a pre-emptive, pro-active course of action?" Nuaili said.

"The decision was to do two things. One, effective 1 March, eliminate as much as possible the leakage. Thats very straightforward ... The second decision was ... to effect a reduction of one million bpd from the current ceiling, not from the level of production, because we are assuming that the level of production will be as close as possible to the ceiling."

In London, oil prices slipped early Wednesday as traders took a sceptical view of Opec's ability to achieve the hefty output cuts it announced a day earlier to the surprise of the market.

The price of benchmark Brent North Sea crude oil for March delivery fell 22 cents from the previous closing price to $29.82.

New York's reference light sweet crude March contract lost seven cents to $33.80 in pre-opening electronic deals.

World oil prices had surged on Tuesday after the Opec ministers wrong-footed the market by announcing the production cut. The minister underlined the group's commitment to an average Opec basket price of $25 a barrel.