Oil hawks want OPEC members to double production cuts

16 December 2008

Iran and Venezuela are in the forefront urging OPEC to cut production. Facing a weak economy at home and falling prices of its principle exports these two countries are pushing the other gulf nations to double the cuts in oil production.

Venezuela, a major supplier to the US, is a price hawk in OPEC. Oil prices have fallen about $100 a barrel since July, slashing Venezuela's income from its main export.

Despite the low prices, which make some projects with high operational costs less attractive, foreign companies remain interested in developing Venezuela's reserves.

Rafael Ramirez, Venezuela's energy minister, said: ''We want a very, very strong decision,'' adding that he would support a further cut of 1m-2m b/d.

Gholamhossein Nozari, Iran's oil minister, concurred, saying: ''A cut of 1.5m-2m b/d a day of Opec's oil can restore stability to the oil market and keep its price at a suitable level.''

Is the world over supplied?
With falling demand in for energy, the current oil production seems to be in excess hence pushing prices in a downward spiral. The situation is so bad that, storage tanks across the world are so full with unwanted oil that that traders and oil companies are resorting to the more expensive option of using super tankers to hold barrels.