The pressure is on for the cartel of global oil-producing countries to cut output at today's emergency meeting to try to stabilise the erratic price.
Chakib Khelil, the Algerian oil minister, and president of the 13-strong Organisation of Petroleum Exporting Countries (Opec), said that the group would "most probably" agree a cut, and US crude futures rallied from a 16-month low the previous day.
The oil price has plummeted by more than half from its all-time high of $147 per barrel in July. Opec has already cut production this autumn, but to no avail. The price dipped below $80 for the first time since August 2007 last week – triggering today's extraordinary session – and is continuing its slide. Despite yesterday's gains, prices for North Sea Brent and US crude, for December delivery, were both below $70 per barrel.
The big question today is the size of any production cut, an issue on which Opec members are split. Last week the Qatari oil minister anticipated reduction in supply of more than 1 million barrels per day (bpd), and his Ecuadorean counterpart was quoting an ideal price of $80 per barrel. This week a Libyan government official described the market as "flooded" and questioned whether a 1 million bpd cut would be sufficient. By yesterday, the Iranian oil minister, Gholamhossein Nozari, was touting a 2 million bpd reduction.
But some of Opec's biggest members, including Kuwait and Saudi Arabia, are less bullish, emphasising that any measures must take into account the global financial crisis. More expensive energy will strengthen the recessionary tendencies in economies across the developed world, putting even greater pressure on prices.Reuse content