Special Report:
Global Financial Crisis
by Wu Liming, Shang Jun
VIENNA, Oct. 24 (Xinhua) -- In the face of the
ongoing global financial crisis, it has proved difficult for the Organization of
the Petroleum Exporting Countries (OPEC) to sustain oil prices by cutting the
output, observers say.
¡¡¡¡OIL PRICE SLUMPS AFTER OUTPUT
CUT
On Friday, OPEC announced the cut of daily oil output
by 1.5 million barrels. But instead of boosting the oil price in the
international market, the move prompted world oil prices to plunge to a 17-month
low.
Brent North Sea crude for December delivery was
slashed to 61.08 U. S. dollars per barrel, which was last seen in March 2007.
 |
|
The Organization of the Petroleum
Exporting Countries (OPEC) conference president and Algeria's Minister of
Energy and Mines Chekib Khelil holds a press conference in Vienna, capital
of Austria, on Oct. 24, 2008. OPEC agreed on Friday to cut oil output by
1.5 million barrels a day. (Xinhua Photo)
Photo Gallery>>> |
New York's main contract, light sweet crude for
December delivery slumped to 63.05 dollars a barrel, the lowest since May 2007.
On July 11, 2008, the oil price hit a record high of
147.27 dollars per barrel, but it has plunged sharply thereafter.
Over the past three months, oil price has seen a
steep slide in the international market, partly triggered by the financial
crisis across the world.
Against this background, OPEC, which produces around
40 percent of the world's oil, rescheduled its extraordinary meeting by putting
ahead the November meeting to Oct. 24, aiming to debate about the output cut.
OPEC MAY START ANOTHER
CYCLE OF OUTPUT CUT
In a resolution issued at Friday's meeting, OPEC
vowed to monitor the international market to decide whether to take further
actions.
"There is over supply in the international market,"
OPEC conference president Chekib Khelil, who is also Algeria's energy minister,
told a press conference after the meeting.
Khelil said an OPEC meeting scheduled for December
will review the oil supply and decide whether to further cut output.
Observers believed that OPEC may launch another cycle
of output cut to salvage the oil price.
"We believe this week will mark the start of a new
quota reduction cycle by OPEC and it will continue through 2009," Deutsche Bank
analyst Michael Lewis said.
In retrospect, over the past 10 years, OPEC had made
three major output cuts, in 1998, 2001 and 2006 respectively, but each saw no
immediate price rebound.
Just as Khelil pointed out, apart from supply and
demand, speculation in energy market is an important factor affecting the oil
price.
The International Energy Agency (IEA) was critical of
OPEC's cut. "It is not a helpful decision because markets are quite nervous,"
Eduardo Lopez, a senior analyst at the IEA's oil market division, was quoted as
saying by local media.
OPEC'S
BEWILDERMENT
On the issue of output cut, OPEC is facing a
bewildering situation both within and outside.
For one thing, the world is calling for a reasonable
oil price to fight a possible global economic recession stemming from the world
financial crisis.
As a matter of fact, investors across financial
markets are increasingly pessimistic about the world economy. European and Asian
stocks fell sharply on Friday, led by a 10 percent drop in Japan's Nikkei
average and 5 percent in the German DAX index.
Germany, the biggest economy of Europe, has slashed
its economic growth from 1.4 percent to merely 0.2 percent for 2009.
Earlier this month, Germany's major economic research
institutes warned that Germany was "on the edge of a recession" due to the
global financial crisis.
Last month, oil demand in the United States, the
world's biggest oil consumer, fell to the lowest level in more than five years,
at 18.6 million barrels a day, according to the Department of Energy.
Prior to OPEC's decision to cut the output, British
Prime Minister Gordon Brown described the cut as "wrong for the world economy,"
saying it was "absolutely scandalous" amid a global economic crisis.
OPEC members were divided over the output cut as each
member has its own target price.
Saudi Arabia, the biggest oil exporter in the world,
is the lowest-cost producer within OPEC.
World media widely estimated that Saudi Arabia can
afford to let oil prices fall for a while without hurting its budget as it could
sustain oil prices between 55 and 65 dollars a barrel.
Other OPEC members are not so fortunate, as they need
higher oil prices to support their budget requirements.
Nigeria's Oil Minister Odein Ajumogobia said his
country would be more comfortable with 80 dollars a barrel. Qatar has set a
range of 70 to 90 dollars a barrel as the target price, while Iran said any
price below 90 dollars a barrel would hurt some oil producers.
OPEC production cut fails to halt
prices slide
NEW YORK, Oct. 24 (Xinhua) -- Crude
futures dipped below 65 U.S. dollars a barrel Friday despite the Organization of
the Petroleum Exporting Countries (OPEC) agreed to cut production.
Light, sweet crude for December delivery was down 3.69 dollars to settle at
64.15 dollars a barrel, after falling as low as 62.65 dollars, the lowest since
May 2007. Full story
OPEC holds urgent meeting in Vienna on
oil output cut
VIENNA, Oct. 24 (Xinhua) -- The Organization of the
Petroleum Exporting Countries (OPEC) held an "extraordinary meeting" on Friday
in Vienna, aiming to reach a deal on oil output cut.
Ministers in charge of oil production from 13 OPEC members
gathered here at the OPEC headquarters, exploring a consensus in abid to address
the slide of oil prices. Full story
Crude oil tumbles to 16-month low
before OPEC meeting
NEW
YORK, Oct. 22 (Xinhua) -- Crude oil tumbled more than 5 U.S. dollars a barrel to
a 16-month low Wednesday as the falling energy consumption outweighed the
near-certain production cut by OPEC this week.
Light, sweet crude for December delivery slid 5.43 dollars
to settle at 66.75 dollars a barrel on the New York Mercantile Exchange (NYMEX).
Futures dropped to 66.175 dollars a barrel during the trading, the lowest price
since June 14, 2007. Full story
Iran calls for drastic cut in OPEC
daily output
VIENNA, Oct. 23
(Xinhua) -- The Organization of Petroleum Exporting Countries (OPEC) should
slash daily production by 2 million barrels due to the continuing decline in oil
prices, Iranian Oil Minister Gholam Hossein Nozari said here Thursday.
A cut of "2 million (barrels per day) will stabilize"
prices in the international oil markets, said Nozari, whose country is an OPEC
member. Full story
Crude oil rebounds as OPEC meeting
nears
NEW YORK, Oct. 23
(Xinhua) -- Crude oil prices rebounded on Thursday as some OPEC members called
for deeper production cut on the emergent meeting tomorrow.
Light, sweet crude for December delivery rose 1.09 U.S.
dollars to settle at 67.84 dollars a barrel on the New York Mercantile Exchange.
Price hit a 16-month low of near 66 dollars a barrel Wednesday as a
greater-than-expected build up in U.S. fuel stockpiles exacerbated concerns over
slumping demand due to a global economic downturn. Full story
OPEC to keep crude output at current
level
VIENNA, Sept. 9
(Xinhua) -- The Organization of Petroleum Exporting Countries (OPEC) will hold
its official crude oil production quota unchanged until mid-December, OPEC
President Chakib Khelil emphasized before the 149th Ordinary Meeting held in
Vienna late Tuesday night.
The market is "well supplied" and should "maintain at a
comfortable level," the Algerian Oil Minister said. he also said that "in all
likelihood, we will do nothing before December."
Crude prices fall below $104 per
barrel
NEW YORK, Sept. 9 (Xinhua)
-- Crude prices fell below 104 U.S. dollars a barrel Tuesday for as Hurricane
Ike would miss critical U.S. Gulf Coast oil installations and OPEC's president
signaled the cartel would leave production unchanged.
The Hurricane Ike hit Cuba Tuesday, weakened from a
Category 3 storm to a Category 1. Investors bet the storm would miss the oil
installations around the Gulf of Mexico. Full story
Saudi Arabia: OPEC output level
contributes to "fairly well-balanced" market
VIENNA, Sept. 9 (Xinhua) -- Saudi Oil Minister Ai
al-Nuaimi said here Tuesday that the international crude oil market is "fairly
well-balanced" and that the current OPEC crude oil output is appropriate.
Ai al-Nuaimi said that OPEC had made great efforts to
fulfill its objectives and stabilize the market. Therefore, the current market
is "fairly well-balanced" and the "inventories are in a healthy position," he
explained. Full story
UAE energy minister: OPEC to ensure
well-supplied market
ABU DHABI,
Sept. 8 (Xinhua) -- The Organization of Petroleum Exporting Countries (OPEC)
will not change its fundamental policy of ensuring a well-supplied market at its
upcoming ministerial meeting in Vienna, the energy minister of the United Arab
Emirates(UAE) said on Monday.
The UAE Minister of Energy Mohammed bin Dhaen al-Hamli,
who will lead the UAE delegation to the OPEC ministerial meeting on Tuesday,
made the statement in an interview with the official Emirates News Agency.
Full story
