Business | Oil & Gas
Opec faces internal dissent over reduction of output
Opec, founded five decades ago to unify oil producers, risks dividing members as the group plans to cut output and raise prices just as developed nations face their worst recession since 1983.
- Bloomberg
- Published: 23:56 October 22, 2008
Riyadh: Opec, founded five decades ago to unify oil producers, risks dividing members as the group plans to cut output and raise prices just as developed nations face their worst recession since 1983.
Iran's energy minister, Gulam Hossain Nozari, said yesterday Opec may slash output quotas by 2.5 million barrels a day, or 8.7 per cent, an amount about equal to what's pumped from Kuwait. The Algerian minister and Opec president, Chakib Khelil, said two days earlier the reduction may be only 1 million barrels.
The debate in the Organisation of Petroleum Exporting Countries pits Saudi Arabia, the group's biggest producer and a US ally, against Venezuela and Iran, two nations that oppose US foreign policy and advocate higher oil costs. Crude plunged 52 per cent to $70.89 (Dh260) Tuesday from its July 11 record of $147.27.
"The divisions arise in Opec because what countries need and want varies," said Gareth Lewis-Davies, an oil analyst at Dresdner Kleinwort Group Ltd. in London. "The Saudis are playing a long-term political game. Other countries have higher costs."
Below $50
Oil options trading shows the probability that crude will fall below $50 a barrel by June has more than doubled in 10 days, Deutsche Bank AG said in a recent report. There is a 9 per cent likelihood that June 2009 crude oil contracts will expire below $50, up from 4 per cent, Deutsche said.
The world's industrialised economies will expand next year at the slowest pace since 1982, the International Monetary Fund said. Growth will weaken to 0.5 per cent in 2009, from 1.5 per cent this year, sending US unemployment to its highest level in 16 years, the agency said.
Oil demand may fall for the first time in 15 years this year.
More from Oil & Gas
More from Business
Business Editor's choice
-
Saudi-Bahraini economic ties hit new high
Whilst press reports continue speculating on a possible new political structure defining ties between Saudi Arabia and Bahrain, facts on the ground confirm ever- stronger economic ties between the two neighbours
-
Cupid targets the Fed with early tweets
Declarations range from pure romance to cute overtures and racier fare
-
Do unemployment figures flatter to deceive?
Jobseekers and recruiters give out mixed signals ranging from optimism to downright despair even as official data show recovery
