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| Economy |
| Opec call for oil cuts 'could hinder global recovery' |
| 2009-03-25 |
| The Organisation of Petroleum Exporting Countries (Opec) cartel's call for compliance with recent production cuts could undermine a global economic recovery because oil prices could spike higher as a result, the Centre for Global Energy Studies (CGES) said on Monday. Opec, which pumps 40% of world oil, called for full compliance with deep cuts agreed late last year when members met earlier this month in Vienna. The 12-nation Opec cartel agreed to slash output by 4,2-million barrels a day from September in a bid to defend tumbling prices. Questions remain about compliance because some cash-strapped member nations do not want to lose precious income. "Opec left output targets unchanged but called for full compliance with last December's agreement when it met in Vienna" on March 15, the energy consultancy CGES said in its latest monthly report. "However, full compliance would send oil prices to levels that would undermine prospects of economic recovery." The global economic downturn has ravaged energy demand and slashed oil prices from record peaks above $147 in July 2008. "Full compliance ... would remove a further 1,1-million barrels a day of oil from the global market, according to the CGES' assessment of Opec production, forcing a global stock draw of more than 1,5-million barrels a day this year," the CGES warned. "While this would normally lead to a healthy rise in oil prices, there are very real worries that -- in the present economic climate -- it would simply undermine the chances of recovery, raise the spectre of inflation and delay the upturn in oil demand that Opec member countries need more than anybody else." |
| Posted by:Fred |
| #7 The real danger of an OPEC cut and potential price increase foreign policy wise is Russia, who budgeted for $95 min/oil price in 2009 and $110 in 2010. Right now Russia's economy is slowly starving on it's gas revenues and as these start to draw down they have nothing to fall back on. A resurgence in oil prices will only help them. And right now that's the last thing the US or Europe needs. |
| Posted by: jefe101 2009-03-25 15:17 |
| #6 OPEC countries are desperate for cash. Like everyone else, they spent too much during the good times and are cutting too little now. So, they are trying to get a short term boost in prices. That won't work, and the desperate members will resort to cheating on their quotas to try and make up the difference. That in turn will bring prices even lower. Of course, none of that may matter at all. Bammo is doing enough damage that we may all be back to horse and buggies soon. Seriously, I'm looking at buying a couple of horses. Maybe a still too... |
| Posted by: Iblis 2009-03-25 13:31 |
| #5 Just filled up with regular (88 Octane, I think) at $1.71 a bit above normal, it's rising here lately. up around 15 cents in a month and a half or so. |
| Posted by: Redneck Jim 2009-03-25 13:28 |
| #4 Perhaps it is time to 'nationalize' a little of OPEC, he said with an evil glint in his eye. |
| Posted by: SteveS 2009-03-25 13:25 |
| #3 I'd be less worried about OPEC grandstanding if Congress hadn't made the United States a de facto member of the cartel by obstructing exploration & exploitation of offshore & Alaskan resources. |
| Posted by: Mitch H. 2009-03-25 12:04 |
| #2 And the problem is being exacerbated by the falling US$. Ever since the announcement of quantitative easing last week, the US$ has been under pressure and the failed gilt auction in the UK is a sign of things to come. As Rick Santelli said this morning, they won't be able to buy enough treasuries to keep interest rates down - in other words the printing presses will have to move into overdrive shortly to keep down longer term mortgage rates and that is highly inflationary down the track. Nothing good is coming out of this. |
| Posted by: Omoter Speaking for Boskone7794 2009-03-25 09:23 |
| #1 Lowest price I have seen for 93 octane at the pump is now $2.30 and rising. |
| Posted by: Jack is Back! 2009-03-25 09:14 |