OPEC meet to discuss production cut as oil prices tumble

15 November 2008

The Organisation of Petroleum Exporting Countries (OPEC), which is schedule to meet on 29 November at Cairo, is proposing to cut production by a further 1 million barrels a day, as prices have tumbled in spite of the 1.5 million barrels a day cut announced earlier.

OPEC, feeling the pinch of the downward spiral in crude prices, which has fallen to $57 from a high of $147 a barrel in July down $90 a barrel, as of yesterday, has now called for a full member meet although the scheduled meet was only for select Arab member states.

As prices have fallen to a 21-month low, OPEC is grappling with the problem of crude slipping below the $50 mark as global demand slows down amidst an ongoing economic slowdown.

In September, when OPEC cut production by 1.5 million barrels a day, it hoped the price would stabilise at around $80 to $100 a barrel - a price which they said was required to meet the cost of pumping oil. (See: Crude moves above $100 a barrel as OPEC agrees to cut output) 

The cut, however, failed to stabilise the price of crude. (See: OPEC oil cut fails to raise crude prices)  it now hopes that the proposed cut will stop it tumbling below $50.

OPEC members, notably Iran and Venezuela, who have been the hardest hit, have always been clamoring for a cut in production although this will be the third cut in as many months.