OPEC agrees to record cut of two million oil barrels: Saudi minister

[Mari333]

Source: petroleumworld.com

ORAN
Petroleumworld.com, December 17, 2008

The OPEC oil cartel agreed on Wednesday to a record output cut of two million barrels a day, the Saudi Arabian oil minister said, with non-member producers also ready to slash 600,000 barrels.

"There is a consensus on a cut of two million barrels a day," Saudi Arabian Oil Minister Ali al-Nuaimi told reporters as a meeting of the Organization of Petroleum Exporting Countries got underway here.

The OPEC cut from headline output of 27.3 million barrels per day, which would be the biggest reduction ever, could be complemented by combined reductions from non-OPEC members Russia and Azerbaijan of 600,000 barrels a day.

Read more: http://www.petroleumworld.com/storyt08121701.htm

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I'm going to buy even LESS now.

[bif]

1. Why doesn't George get down on his knees

In front of his ol' pals the Saudis again? Oh, he's a lame duck, that's right.

[SpiralHawk]

2. "Don't worry, we republicons will get our profit. Smirk." - Commander AWOL (R)

"And don't any of you fact-based lib-ruls start pointing out that virtually ALL the 9/11 hijackers were Saudi. That would be, um, telling. Smirk."

- Commander AWOL (R)

[AndyA]

3. I just saw where it's going to be 4.5 million barrels!

More than double what they were saying.

OPEC is nothing more than a bunch of opportunistic crooks. And hopefully, when we get a "non-oil man" administration in place, this issue will be addressed.

[Javaman]

6. From what I understand it's...

2.2 million from it's daily out put and 4.2 million off the market from it's september levels.

back in sept we were drinking the stuff down, when the prices were high.

now that the economy is in the crapper, people are driving less thus driving down demand.

if opec, cut 4.2 million barrels back in sept, there would have certainly been a crash in the world markets, but now that demand is way down, cutting it now, isn't going to have the effect that the saudi's are hoping for.

Frankly, as the economy sinks further into the murky depths of a near depression, the price of oil will drop further, thus pissing off opec that much more. fine by me.

it's at this time, that we should have a crash program of alt fuels. This would leave opec in the shitter. oh well, I can dream.

[tjahome]

4. Cartels are interesting

The problem with collusion in order to price control is thus: you only choose to decrease production and therefore increase price when the price is too low. When the price is too low, the oil producing countries are experiencing a decline in revenue. However, in order to increase prices, those very countries need to allow revenue to decline even further (sell less of the now lower priced commodity). This very situation tests the gumption of the cartel, as some members (Venezuela, Iraq) may not be in a financial position to decrease production, and by refusing to do so face sanction or expulsion from OPEC.

What worries me about this is the fact that diplomatically we (the US) do not have any input here. Furthermore, OPEC nations have less control today than in the 1980's, with China now a net exporter of oil, and the Russian inability to turn off wells because of temperature problems.

In a nutshell, my rambling post can be reduced to this: I don't think OPEC can survive this time.

[onehandle]

5. Bomb their ass and take their gas.

Oh, wait. That's just for poor and defenseless countries.

Countries that financed 9/11, get rewarded.

[hunter]

7. Peak oil is going to have some ugly faces.

Price/production collapses are one of the worst. The economic wherewithal to extract difficult oils rots away in periods like this.

The more difficult to extract and process oils are never going to be profitable. They are just another imaginary asset in an economy corrupted by imaginary assets.