Friday, October 24, 2008

OPEC Announces Big Production Cuts

October 24: Oil prices plunge nearly $5, to $63 a barrel, even while OPEC shows "solidarity" by announcing a 1.5 million-barrel-per-day production cut

Through the nine years of ever-increasing oil prices, OPEC snoozed, faintly uneasy with the damage high prices were doing to its customers' economies but content to reap the windfall. Now, with prices having fallen by close to 60% from their July peak of $147 per barrel, the Vienna-based organization is waking up, if not panicking.

On Oct. 24, OPEC announced production cuts of 1.5 million barrels per day. And to try to make the cuts credible, the organization spelled them out for each member, including Angola, which has recently joined and agreed to give up 99,000 barrels per day. "These are real cuts, not B.S.," says Vera Deladoucette, an analyst at Cambridge Energy Research Associates, who was attending the meeting. "Prices close to $60 per barrel concentrated the minds of people." More >>>