Opec oil ministers meet today to remove a record 2 million barrels per day from oil markets as they race to balance supply with the world’s collapsing demand for fuel.
‘The 12 Opec members are also aiming to build a floor under prices that have dropped more than $100 from a July peak above $147 a barrel. They are due to meet from 3.30am EST. Saudi Arabia, the world’s biggest oil exporter, has led by example – reducing supplies to customers even before a cut has been agreed to help push prices back toward the $75 level Saudi King Abdullah has identified as “fair”. Ali al-Naimi, the kingdom’s oil minister, was first to publicly call for curbs of 2 million bpd ahead of the meeting. That figure was swiftly endorsed by others in the group that pumps more than a third of the world’s oil. An Opec delegate told Reuters there was consensus for a cut of that magnitude starting from 1 January. “A minimum of two million we think needs to be cut so we can balance the market,” Iraqi Oil Minister Hussain al-Shahristani told Reuters. “It’s in everyone’s interest for supply and demand to be better aligned,” Nigerian Minister of State for Oil Odein Ajumogobia told Reuters. “They are clearly not at the moment.” The expected cut, the third this year, would bring a total reduction in Opec supply to four million bpd, nearly a 5% cut in world oil supplies. Oil below $50 is uncomfortable for all in Opec, but especially for Venezuela and Iran which are dependent on higher prices to fund ambitious domestic programs. Oil was trading slightly firmer today, just above $44 a barrel. A limited recovery in prices would put a bit more strain on a recessionary global economy, it may help pull the world back from the brink of deflation – a growing source of concern, analysts said. “We are in harmony, we know the situation is difficult,” Opec secretary-general Abdullah al-Badri said yesterday.