Falling Oil Prices: OPEC May Consider Another Cut
By Ejiofor Alike with agency report, 10.29.2008
Organisation of Petroleum Exporting Countries (OPEC), has said that it could call another meeting before the group's next scheduled meeting in December, to take a fresh look at its output.
This is coming barely four days after OPEC agreed on 1.5million barrels per day production cut, to address the falling price of oil.In response to nearly 60 per cent fall in oil prices from a record of $147.27 hit in July, OPEC agreed at an emergency meeting last week, to cut production by 1.5 million barrels per day.
However, the group's Secretary-General, Abdullah al-Badri, said yesterday that if prices continue to fall, OPEC would call another meeting.Agency report quoted the OPEC scribe as saying at a conference in London , that “if circumstances dictate we have to have another meeting, we will have a meeting before the (December) Algerian meeting.
”At the conference, Libya 's most senior oil official, Shokri Ghanem, said OPEC could need to reduce output further.“Talking about the recent cut, we have to wait to see how the market behaves in the coming weeks. If the price continues to deteriorate, it is going to affect everything,” Ghanem said.OPEC weekend at an Extraordinary Meeting in Vienna, Austria, approved a reduction in crude oil production by 1.5million barrels per day, with Nigeria accounting for 113,000 barrels per day of this figure.
The move, which was aimed at addressing declining prices of oil in the international market, will see Algeria reducing its daily production by 71, 000 barrels per day.Other member countries affected include Angola, 99,000bpd; Ecuador, 27,000 bpd; Islamic Republic of Iran, 199,000 bpd; Kuwait, 132,000 bpd; Libya, 89,000 bpd; Qatar 43,000 bpd; Saudi Arabia, 466,000 bpd United Arab Emirate 134,000 bpd and Venezuela, 129,000 bpd.
Meanwhile, oil prices have continued to fall, despite last week's 1.5 million-barrel-a-day cut in production.US light sweet crude for delivery in December dropped to a 17-month low of $61.30 a barrel before recovering somewhat to trade at $62.42.London Brent crude fell below $60 a barrel before recovering to $61.32.
In a communiqué released at the end of the conference, OPEC said the Extraordinary Meeting was convened in order to discuss the current global financial crisis, the world economic situation and their impacts on the oil market.
According to the communiqué, the conference began by emphasising that it shared the concern of the international community – “of which OPEC Member Countries are an integral part -- over ongoing developments in financial markets”.OPEC also stated that it observed that the financial crisis was already having a noticeable impact on the world economy, and had also dampened the demand for energy in general, and oil in particular.“This slowdown in oil demand is serving to exacerbate the situation in a market which has been over-supplied with crude for some time, an observation which the Organisation has been making since earlier this year. Moreover, forecasts indicate that the fall in demand will deepen, despite the approach of winter in the northern hemisphere.
