OPEC mulls over cut in production to arrest fall in prices

Vienna, November 29: The Organization of Petroleum Exporting Countries (OPEC) is contemplating another cut in oil production to shore up the oil prices.

However the final decision regarding the issue has been put off till Dec. 17 when the OPEC members meet in Oran, Algeria. This time frame will allow OPEC to gauge the impact of the previous two cuts on oil prices.

Ali al-Naimi, oil minister of Saudi Arabia said, "We will decide on a firm measure when we meet in Oran. A cut is possible, we will have to see."

After zooming to a level of $147 dollars in mid-July, the price of a barrel of oil has plummeted to below $55. A slump in demand triggered by the current economic slowdown is said to be the cause behind the fall in prices.

Headquartered in Vienna, the Organization of Petroleum Exporting Countries (OPEC) is a cartel of 12 countries viz Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. OPEC produces more than 40 percent of the world’s oil. Saudi Arabia is the de facto OPEC leader of the group.

OPEC President Chakib Khelil categorically stated that the demand supply mismatch has led to oil shedding 62 percent of its July value. He said, "Some countries are unable to sell their crude. They can find no buyer. Crude should be taken off the market. The market is oversupplied."

The OPEC members are meeting in Cairo today in what is being termed as an informal and preparatory meeting. Iranian oil minister, Gholam Hossein Nozari, said, "Here we will prepare some data and maybe the final decision will be in Algeria."

While a cut in production is the most likely outcome, Libyan oil chief, Shokri Ghanem, said, "all options are open."