Opec today moved to put a floor under the falling oil price by effectively slashing production as crude dipped below $100 a barrel.

Cartel president Chakib Khelil told members to limit strictly production to agreed quotas in a move that would cut supply by 520,000 barrels a day.

It came as Opec oil ministers met in Vienna against a backdrop of falling oil prices. They have tumbled around 30% since a peak of $147 a barrel in July.

Oil fell $4.54 to $99.04 a barrel in London ahead of the meeting but was back at $100.70 today, while in New York it traded at $103.46, having fallen as low as $102.06.

The outcome of the meeting shocked traders after many of the cartel's members insisted ahead of the talks that production levels would not be changed.

Jonathan Kornafel of Hudson Capital Energy said: "It's definitely a defensive measure to keep prices above $100. They don't want to see us go back to $140 or $150 but they want us over $100. It's a bit of a shock to the market and that's why we're up."

However, the oil price did not spike as sharply as might have been expected amid growing concerns over the state of the world economy and falling energy demand.

Opec, the Organisation of the Petroleum Exporting Countries, is responsible for about 45% of the world's crude oil production and last year set an output target of 28.8million barrels per day.
Despite the set quotas, members were reckoned to be pumping more than the target with supply increased in recent months by the likes of Saudi Arabia.

Opec today agreed to "strictly" comply with the production ceilings.

"I think if you do your own calculations properly, it will be a lowering of production by about 520,000 barrels per day," said Khelil, who is Algerian oil minister as well as Opec president.

"Actions to curb output will be taken by members as soon as they can. That means in the next 40 days," he said.

Tony Nunan of Mitsubishi Corp said: "I didn't expect the organisation to come out and officially say that they had cut."

Opec blamed the falling price of oil on the weakening world economy, a stronger US dollar, easing geopolitical tensions and greater supply.

"All the foregoing indicates a shift in market sentiment causing downside risks to the global oil market outlook," it said.

Ike 'to swerve Gulf platforms'

Forecasters today predicted Hurricane Ike would miss most of the offshore oil platforms in the Gulf of Mexico, easing the upwards pressure on the oil price from Opec's actions.

While Ike strengthened to a category one hurricane overnight, and is expected to whip up to Category three over the warm waters of the Gulf, projections this morning had it heading towards the middle of the Texas coast, avoiding the main offshore production regions.

However, many producers, including Britain's BHP Billiton, were evacuating and shutting down their platforms.