OPEC president favours drastic cuts as demand plummets

12 December 2008

Algiers: According to Algerian oil minister and OPEC president Dr Chakib Khelil, the Organisation of Petroleum Exporting Countries should favour a more "severe" reduction in output at its upcoming meeting in Algeria next week.

Algerian news agency APS quoted Dr Khelil, the Algerian energy and mines minister, as saying, "The Oran meeting should (decide) a more severe cut (in production) to establish a balance between supply and demand." The report did not cite any figures.

OPEC has agreed to cuts of two billion barrels per day since early September, and oil ministers of member countries are scheduled to meet in the western Algerian town of Oran on 17 December, where producers and consumers of oil expect the cartel to authorise a large cut in production to prevent slipping of oil prices.

The APS news agency also quoted the minister as saying that the expected revenues of Algerian oil and gas could hit a record high of $76 billion in 2008, as against $59 billion in 2007.
Demand down

Global consumption of oil is set to plummet this year for the first time since 1983, as the global economic slowdown cuts fuel demand. According to the world's foremost energy forecaster, the International Energy Agency (IEA), worldwide is projected to fall by around 200,000 barrels a day, to 85.8 million barrels a day, in 2008. IEA's new forecast pegs demand at 350,000 barrels a day lower than its last monthly report.

Reports suggested that oil demand may recover a little in 2009, though at a much slower pace, and mostly after the global economy turns a corner sometime in the second half of 2009. Consumption is growing by 0.5 per cent, the equivalent of 400,000 barrels a day, which is still 260,000 barrels a day lesser than expectations.