The 12 member OPEC has advanced their meet by 3 weeks to deliberate on scaling down oil production in hope of bringing back the prices that they enjoyed couple of months ago. In July this year the oil price per barrel reached an all time high of $147 and recently it plummeted to 16 month low of $65. Surprisingly, the prices that halved in less than 3 months not only alarmed OPEC but also other oil producing nations including Russia.
The gloomy economic conditions across the globe have considerably reduced the demand for oil, and major oil guzzler, the US has released recently a data that said they had excess of crude stocks. But economists cautioned if OPEC cuts oil production to create artificial shortage would only make the recession getting worse and out of control. The Algerian Chakib Kjelil, the current OPEC president and company would have to keep the present economic turmoil in mind before going in for drastic cuts, they further added.
The organization is expected to discuss on cutting up to 2 million barrels per day of production from its current levels of 32 million barrels. They hope such measures would stabilize the prices between $90 and $100 per barrel. But any such decision from OPEC is likely to make more enemies since every non-producing nation is trying hard to overcome the financial crises as higher oil prices will worsen the situation.
Though OPEC produce just one third of total oil, their reduced production will certainly pose a challenge to the lower oil prices. However, a jump in oil prices will benefit countries like Canada and Russia as their production cost is higher as compared to OPEC. It should be noted in the wake of falling oil prices, last month a high level delegation from Russia had attended an OPEC meeting as observers. Nevertheless, as few members of the organization including Saudi Arabia, of late have expanded their production capacities and would not be in a position to back drastic cut is the only favorable aspect to avoid any repetition of oil price spiral.