Should OPEC cut oil production again at Sunday's meeting?

Posted Mar 14th 2009 8:40AM by Connie Madon
Filed under: International Markets, Middle East, Oil

Put yourself in the shoes of the OPEC ministers meeting this weekend in Geneva. They will be sitting down and discussing the current supply/demand for oil in the coming months. The world is in crisis and OPEC has cut oil production several times over the past year. Now they must decide again what to do.

Here are some cold facts. OPEC expects oil demand to fall by 1 million barrels per day in 2009. That in itself is not so unusual, but now look at the one. Demand growth from developing countries is shrinking by 80% compared with last year. There is a glut of oil in storage and in tankers around the world, with estimates of a 57-day supply. This excess supply is unusually high by OPEC's standards.

Then there are problems among OPEC members themselves. While they all agree to a production cut, there is rarely any follow-through by each and every member. For example, Ecuador cut its production by only 33% while Saudi Arabia cut theirs by 108%. Then you have non-OPEC producers that actually will increase production by 400,000 barrels per day.

In the current situation, do you think OPEC will cut production again?

Tags: inthenews, oil demand, oil glut, oil production, OPEC

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Reader Comments (Page 1 of 1)

3-14-2009 @ 10:18AM

Energy said...

The visitors on my blog have been taking a poll on this question - they are currently split: 44% Yes and 56% No.

http://energyfortunes.blogspot.com

3-14-2009 @ 11:30AM

emesb said...

That would be brilliant. About the only thing keeping what is left of the economy going right now is that fuel is much cheaper than it was. if oil was still 140.00 a barrel where would we be.
I have thought for a long time that what we are experiencing is economic terrorism of sorts. The cost of oil went through the roof and pushed all the other garbage that was being done to the tipping point.

3-14-2009 @ 11:36AM

LUWEEGEE3 said...

OPEC has been the cause of the worlds economic crush,people paying $4 up to $28 per gallon for gasoine has taken the extra money away from the economy's.The more people pay fpr gasoline the less that goes into the economy.What OPEC needs to do is bring back the $22 per barrel price for the next several years or it really wont matter what kind of production they do,there wont be enough people to pay for gasoline,why does OPEC think they have to keep cutting productions? OPEC had better make available more crude or its really over

3-14-2009 @ 2:23PM

hsr0601 said...

I guess the great depression had a great deal of natural energy sources, today the current initial depression has great technologies instead. It is likely that this moment is the last chance to survive as the environment to invest in a new energy base is going to be getting worse down the road.
I would love to suggest 'A Global Green New Deal' and stress only two recent progresses:
1. Researchers at MIT have designed a new battery that can recharge devices about 100 times faster than conventional lithium ion batteries. The design could lead to electric car batteries that charge in 5 minutes

2. Breakthrough Spin Battery Size of Hair Could Run Electric Car For Miles:
the actual device has a diameter of a human hair, the energy that could be stored in it could potentially run a car for miles.
Physicists at the University of Miami and Tokyo and Tohoku have invented a radical new type of battery in the laboratory. The profound findings were published in the journal Nature.

As the oil reserve declines, even the oil-rich UAE is committed to renewable energy movement, which is also in the oil-producing countries' interest, even if they keep silent, accordingly they will not keep the oil price low, I suppose. And G20 & OPEC meetings might indicate that 'a global green new deal' is going to be a solution as the energy is both life and common ground for world-wide economic prosperity.

Thanks.