OPEC slashes oil production by 1.5 million barrels per day

October 24, 2008 by · Leave a Comment
Filed under: Commodities News 

They have to maintain a very fine balance during this economic crisis.  If they reduce production to the point where demand outstrips supply, we could see a huge price swing that could collaspe companies that require fuel to run thier operations.   On the other hand, if the price goes too low, it will hurt oil exporting countries and take the incentive away to buildout renewable energy sources before the oil situation becomes much worse.

AP:

 OPEC said at an emergency meeting Friday that it will slash oil production by 1.5 million barrels to stem the “dramatic collapse” of oil prices, but crude prices plunged 5 percent anyway as financial markets spiraled downward across the globe.

Demand for crude has evaporated and the supply levers held by the Organization of Petroleum Exporting Countries appear to have little influence in the current economic climate.

Iran and Venezuela pushed for a cut of 2 million barrels a day, but there were concerns among other OPEC members that a more severe production cut would exacerbate a deteriorating economic crisis and further destroy demand.

OPEC officials, however, signaled they were prepared to slice deeper quickly if crude continues its freefall.

The world’s biggest crude consumer immediately blasted OPEC.

“It has always been our view that the value of commodities, including oil, should be determined in open, competitive markets, and not by these kinds of anti-market production decisions,” White House deputy press secretary Tony Fratto said Friday. “The high oil prices from the past year contributed to the slowdown in demand and the subsequent downturn in the economy, and we would ask that everyone keep that in mind going forward.”

OPEC is already producing 300,000 barrels a day above its own quota of about 29 million barrels.

Click Here to Continue Reading

 

Speak Your Mind

Tell us what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!