OPEC ministers tackle falling oil prices
OPEC ministers headed for Vienna on Monday to wrestle with the issue of falling oil prices, with analysts expecting them to agree to trim output to help keep crude above $100 a barrel.
The question facing the oil producer group, which is to hold a policy meeting Tuesday, is when, not if, to cut its oil production target as crude prices slide in the face of weakening global economic growth, analysts say. Most observers expect the 13-nation cartel to agree to reduce its output informally before waiting until later, possibly at a scheduled gathering in December, to alter its official output target.
The informal cut will be achieved by members, mainly powerhouse Saudi Arabia, agreeing to cut their excess production above their OPEC quota, which would remove oil from the market but not amount to a formal change in policy. “Anyone that is overdoing their quota should respect it,” Libya’s OPEC representative, National Oil Corporation (NOC) chairman Shukri Ghanem, told AFP by telephone on Sunday. “The market is more than oversupplied it seems.”
Under fierce pressure from the United States, Saudi Arabia agreed in May and June to increase production to help calm the runaway crude market which reached a pinnacle on July 11, when crude struck $147 a barrel in New York. Saudi Arabia, the world’s biggest crude producer, is estimated to be producing about 700,000 barrels per day above its quota. The stakes are entirely different to the last time OPEC members met in March, when crude prices had broken through $100 a barrel and were on a steep upwards trajectory.
This time, oil prices are on the way down and approaching $100 a barrel - a level many members, above all the traditional price h
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