Profit Uber Alles: OPEC Threatens Oil Production Cuts

Vladimir Weiss/Bloomberg News - Chakib Khelil, center, the president of OPEC, said on Friday that some regular customers could not obtain financing to buy oil.

Stung by what it called “a dramatic collapse” in crude prices, the OPEC cartel said on Friday that it would reduce output by a steeper-than-expected 1.5 million barrels a day. But that action failed to brake the price decline, and oil dropped 5 percent more by the end of the day.

 

The oil cartel swiftly agreed to the cut in an emergency meeting at its headquarters [in Vienna], and its president suggested afterward that still more production cuts were coming as OPEC struggled to get ahead of an economic slowdown so severe it could leave the world awash in oil.

The stunning decline of oil prices in recent weeks has left oil-exporting countries fearful that they will have to cut government budgets, including the popular social programs that cement many leaders’ hold on power.

Oil dropped to $64.15 a barrel on Friday, from a high close of $145.29 on July 3, a 56 percent decline in 16 weeks and one of the steepest in the oil markets.

If prices keep falling, OPEC’s president, Chakib Khelil, said the cartel would “definitely” reduce its production again in coming months, either when it meets in Algeria in December, or sooner.

via NYT: OPEC says it will cut oil output

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