After months of struggle, OPEC gets its act together

Posted Dec 13th 2008 7:23AM by Douglas McIntyre
Filed under: Russia, Economic Data, Oil

OPEC members have not been in concert about when to cut production and by how much. The cartel's November meeting came and went. Nothing happened. Some members were accused of not following the September cut plan.

But, now crude is moving toward $40 and some of the producing nations are in real financial trouble. Russia, which is not a member, is also pushing cuts to bring prices back up, at least to the $60 level.

The financial pain of oil prices that are too low to make big money is about to force action by the cartel. According to Reuters, "There is an OPEC consensus on the reduction. But I can not tell you (more)," said OPEC President Chakib Khelil.

It was assumed before the November meeting that a production cut of two million barrels of oil a day would do the trick. Since then there have been reports that worldwide consumption of crude will drop for the first time since 1983. And, China is actually importing less than it has in a decade.

What happens now? It is anyone's guess, but a chop of 2.5 million to 3 million barrels a day in production would certainly not be surprising. If that happens crude could go up $20 in a flash.

Douglas A. McIntyre is an editor at 247wallst.com

Tags: Chakib Khelil, inthenews, oil, oil prices, oil production, OPEC, Russia

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Reader Comments (Page 1 of 1)

12-13-2008 @ 10:46AM

Irish said...

Buy your oil to heat your homes NOW - next week noone will be able to afford it. Our government bills us $ 700 billion to bail out GREEDY Wall Street and the banks, unemployment keeps going up, and now they're cutting production to raise the price - ANOTHER way to bilk the middle class into poverty. When is the wealth seperation in this country going to end?

12-13-2008 @ 11:56AM

JCH said...

Will American oil producers sit silent and allow Americans to cuss about OPEC? You betcha. Inside, they're cheering OPEC. They probably wish they could join.

Our Canadian lapdogs will try to let OPEC save their butts.

12-13-2008 @ 7:25PM

Iridium said...

Oh boo hoo Russia, Saudi Arabia, Venez, and the rest of you poor countries.

GO F YOURSELF. You got greedy and loved the artificial oil price. Oil should be $30 a barrell and if oil didn't go to $147 you'd love $30 a barrel. You'd be dancing in the streets at $40.

You just got so used to raping the world and living off the excess that you want to go back there.

If you do it you will fall even harder when you thorw the world into a deeper depression.

RIght now the US government should say that if OPEC cuts production to prop up prices we will remove any government of that country. They can't stop us. We should also hang any trader that forces the price up. Go into the office, take them outside, and string them up on the nearest streetlight.

Time to take back the world. It needs to happen now.