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29 Dec, 2014 09:36

OPEC must defend income of its members – Algerian energy minister

OPEC must defend income of its members – Algerian energy minister

Algeria has called for OPEC to cut oil production to raise prices and help a number of member countries from plunging deeper into crisis, according to Energy Minister Youcef Yousfi.

"OPEC should intervene to correct the imbalances by cutting oil output to push prices up and defend incomes of the member countries," Yousfi said during a news conference.

He added that Algeria does not share the opinion of OPEC’s major suppliers who believe they should not interfere as the market will settle the price itself.

READ MORE: OPEC ‘effectively dissolved’; oil will slide to $50 - Bank of America

Algeria has foreign reserves of $200 billion but is suffering from falling oil prices since oil revenue provides 97 percent of the country’s hard currency and 60 percent of its budget.

READ MORE: $20 oil wouldn’t force production cut – Saudi oil minister

The concern over a toughening economic situation has made the Algerian government introduce austerity measures. On Saturday Prime Minister Abdelmalek Sellal said public sector hiring would be put on hold in 2015. Around 60 percent of the jobs in the country are government jobs.

Major infrastructure projects, such as public transport in the capital Algiers, and the construction of highways in the countryside are expected to be frozen.

The minister also suggested continuing talks between members and non-members of OPEC, as he believes all oil producing countries share the same goals.

Meanwhile, Yousfi says he expects the oil price to swing between $60 and $70 per barrel in 2015 and $80 in 2016.

Algeria is not the only country insisting on a cut in oil output as prices sharply fall. OPEC members Venezuela and Iran also believe cutting production is the best way to stabilize oil prices.

However, Saudi Arabia, OPEC's largest producer, strongly opposes such an option as it has enough reserves to maintain its oil production at a profitable level.