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“The credibility of OPEC is at stake”

October 20, 2006 · · Filed Under Diesel, Gasoline, Oil Industry, Oil Refining 

The recent “plunge” in oil prices since the end of summer has motivated OPEC to call for a cut in members oil production by 4.3% – restricting output to 26.3 million barrels-per-day. This is in effort to halt the fall in price, and “re-stabilize” the market.

From Reuters 

OPEC surprises with deeper oil cut 

OPEC agreed on Friday to curb its output by 1.2 million barrels per day, its first cut for more than two years, to halt a precipitous fall in prices.

The reduction, amounting to 4.3 percent of OPEC’s September production, was deeper than anticipated and the biggest since January 2002. It trims OPEC output to 26.3 million bpd from November 1.

“The credibility of OPEC is at stake,” Algerian Energy and Mines Minister Chakib Khelil told Reuters before the meeting that began Thursday and ended in the early hours of Friday. 

OPEC believes that the “right price” for a barrel of oil is $55 to $60 USD – which is still 3 times to cost we paid in January 2002.


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