OPEC president: Oil cuts likely if no price rally

ALGIERS, Algeria — OPEC nations could further reduce oil output if moves last month to slash production do not bolster plummeting oil prices, OPEC president Chakib Khelil said Saturday.

Khelil, who is also Algeria's energy minister, said an OPEC report would show by the end of the month whether all cartel members have enforced the daily 1.5 million barrel reduction decided in October.

He said he hoped the production cut would raise and stabilize prices at a level manageable for both oil-exporting countries and consumer nations.

Reasonable prices should range "between $70 and $90 per barrel," said Khelil, who currently holds the rotating presidency of the Organization of Petroleum Exporting Countries.

Oil prices have traded at around $60 a barrel this week. On the New York Mercantile Exchange, light, sweet crude for December settled at $61.04 a barrel on Friday, but the contract dropped below $60 in overnight electronic trading for the first time in 19 months. That was down dramatically from record highs of more than $140 a barrel in July.

But predicted recession in the U.S. and Europe means demand for oil will continue to decline, Khelil told a news conference in Algiers, adding that rising energy needs in China and India would not be enough to boost oil prices.

OPEC countries "will therefore probably continue to reduce their production, in order to maintain a balance between supply and demand, at least through the beginning of 2009," Khelil said.

This policy is not fully decided yet, and Khelil said further output decisions would likely depend on how markets react to the current cut once it is fully enforced.

The minister is preparing to host OPEC's yearly summit, due in the western Algerian town of Oran on Dec. 17.

Price stability is crucial to countries like Algeria, where more than 95 percent of revenue comes from hydrocarbon exports. The North African nation has the eighth-largest reserves of natural gas, and ranks 14th in oil reserves.

Comments

[Tom95134]

I encourage OPEN to cut production to keep oil and gas prices very high. Gas at $3.75/gal should be the target and, if necessary, the Federal Gas Tax should be adjusted to make this happen. If gas stays high then there is more incentive to move off oil and on towards new energy based systems.

[KillTheMessenger]

Completely agree. Oil is way too cheap now. It provides no incentive to save energy at this price.

[MetalCanuck]

Agreed, 4 dollars was the magical number for American's and 1.50 per liter was right for Canada.

[KillTheMessenger]

High gas taxes in Europe had a very similar effect. Needless to say, Europeans have a lot more efficient vehicles to chose from, too. And that's exactly what we need in the US.

[Thinklongterm]

The more reason we need to get off our oil addiction. They're afraid they won't be able afford to live in their city size palaces anymore.

[Info08]

Their panicked because their revenue forecast for 2008-2009 has been cut to $1.084 trillion instead of $1.116 trillion.

Poor babies :P

Most people would be surprised how terrible the majority of OPEC nations are at managing their own economies. Most OPEC nations are massively corrupt, have squandered trillions of dollars in oil profits and have done next to nothing to prepare for the global economy in terms of diversification of their private sectors.

Saudi Arabia may be able to deal with low oil prices for awhile, but not nations like Russia (could seek OPEC entry), Iran or Venezuela. But I don't feel sorry for any of them at all.

[KillTheMessenger]

Looks like you are getting all of your "information" from a guy named Rush.

:-)

[Info08]

Excuse me? Why would anyone turn to that slug for information?

Here are MY sources on OPEC's revenue forecast-

http://www.platts.com/Oil/News/8084201.xml

http://tonto.eia.doe.gov/oog/info/twip/twip.asp

As for the other part of my post-

Take a look at Venezuela, it has 30% inflation and they're suffering from food shortages. Chavez can play his games with the US and talk tough about reduction, but if he doesn't keep those petro-profits flowing, Venezuela will fall into an economic black hole. And he wouldn't survive a year in office after that.

Reductions and cheap oil is the last thing Russia wants right now. They've been enjoying growth but are overly dependent on revenues from its oil and gas industry. Their credit crisis is monstrous and their economy lacks diversification. Russia supplies the EU with 25% of it's oil and 40% of it's natural gas. There's really nothing else to the Russian economy after oil and gas.

And Iran has to spend heavily just to overcome the heavy toll in UN sanctions imposed against them. What are they going to do for cash during a period of reduction?

Since you brought it up. I'm curious, where do you get your information about OPEC?

[Dystopic]

Russia will NEVER join OPEC. OPEC has maybe 10 years before internal politics tear it apart.

[getoffmedz]

Dear OPEC

Not making enough money? You bunch of $uckin$ vultures.

rot

thanx

[KillTheMessenger]

You mean they are not supposed to sell THEIR oil at THEIR price?

:-)

[EinChicago]

Sure. They can sell it at whatever price they want. We just don't have to buy it from them at that price.

[bluprojekt]

I hope oil prices actually go back up.

As President Elect Obama said, we're going to have to sacrifice and it will not be easy. Americans are too quick to forget that low oil prices are artificially induced to keep us addicted. The Big 3 auto makers were the dealers of gas guzzling SUV's and trucks, and the American sheeple bought them lock, stock and barrel. Now look at them.

The greed of this country is coming home to roost. Now's the time to make the conscious decision to live more simply. Research changes you can make to reduce dependence on filling up - Due to the changes I chose to make, I reduced my driving to less than 230 miles per month. I drive a beater VW Rabbit, and fill up once a month. I'm self employed, & the kind of work I do doesn't require me to drive unless I have to go out of town to meet with my clients. I say let the big 3 go under - they had enough forewarning to produce fuel efficient cars (GM - Who killed the electric car ring a bell?) Increased oil prices will force Americans to do what they haven't been willing to. Run to the grocery store on a bike not only reduces consumption of oil, you also get exercise in the process. It's simple things like this that make a huge difference on our already shrinking pocket books.

"Now Go Away Or I Will Taunt You

[Paul]

Correct.

Congress has ducked their responsibility on this for 35 years.

We need a tax on imported oil to keep the price of gasoline high. This will reduce our use of oil, allow development of mass transit, reduce our balance of trade deficit and would have increased car milage to the point that GM and Ford might still be viable entities now.

[1rewd1]

Works great ... unless you're a rural resident.

Greentards are such great entertainment ...

[1rewd1]

I think it's time to get off ALL our "addictions" to foreign products!

Did you know that the US imports nearly all of it's wheat from Australia?

Time to get off our addiction to foreign wheat!!

[FreeEnergy]

Our dependence on foreign oil impacts every aspect of our society and economy. This past year our wallets were emptied by @ the pump. The cost of food and every consumer product has risen because of increased production and shipping costs. The average family had no money left over to spend, save or invest. So we tighten our belts, we spend less because we have less and sadly that results in more job losses. We have so much available in the way of FREE energy, solar and wind that can be utilized to replace oil. Hybrid and electric plug in cars would replace another huge percentage of our dependence on foreign oil. We spent 168 BILLION on a stimulus pkg that did nothing for our economy. Now there is talk of another stimulus pkg. Why not invest in initiating alternative energy sources and making hybrid and plug in car technology more affordable. It cost the equivalent of 60 cents a gal of gas to drive an elec car. Investing in renewable sources of energy would create millions of badly needed jobs. It is a win-win situation. We have the knowledge and the technology, what we seem to lack as a nation is a PLAN. Jeff Wilson has a great new book out called The Manhattan Project of 2009 Energy Independence NOW. I highly recommend this book to anyone who is worried about our economy and interested in seeing our country become energy independent! http://www.themanhattanprojectof2009.com

[hypnotoad72]

I've been doing green before it became sub-pop-culture hyped up by phonies to do so. (fluorescent screw-in bulbs, LCD TVs, living close to work and walking when possible, et cetera.)

It does cost a bit more in the short term, but long-term it's lower electricity costs and these items are said to last a long time too. Which is true; I haven't had to replace a light bulb in a very long time, and the new 6500k daylight synthetic lights are an even better step to take.

Thanks for the link.