OPEC Takes Steps to Cut Oil Production, 09/10/08

OPEC MEMBER NATIONS

During a meeting of OPEC oil cartel representatives in Vienna, the decision was made to reduce oil output by half a million barrels a day in order to stem the tide of falling oil prices. Members of the Organization of the Petroleum Exporting Countries account for 40 percent of the world’s oil exports. They had scheduled the late-night session to consider how to respond to a 30 percent drop in oil prices since July. Many OPEC member nations believed the market was over-saturated and that supply was too high, thus resulting in relatively smaller profits. Saudi Arabia, the world's leading oil producer, argued that production should remain at "full-tilt" and that prices should be allowed to dip further. On the other side of the spectrum, Iran and Venezuela representatives argued that supply should be lessened to slow falling prices. The decision was reflected in the market following the announcement of the decision with oil prices rising $2. Chakib Khelil, Algeria's oil minister and the president of OPEC stated that, " My hunch is that prices will be going down despite this decision. There is an over-supply, everybody agrees about this." OPEC representatives will meet again in December.

See the article here. -V