posted at 01:50
Author Name: Tomas Hirst
Oil Price Plunge Suggests An OPEC Cut Is Unlikely
Oil prices fell on Thursday ahead of a major meeting of OPEC members to decide on whether to cut production in the face of sharp price falls in the commodity over recent months. The latest falls are being attributed to growing doubts over the cartel's willingness to cut production after Saudi Arabia, OPEC's largest member, appeared to cool expectations on Wednesday. Saudi Oil Minister Ali al-Naimi said he expected the oil market "To stabilise itself eventually" strongly indicating that the kingdom may be willing to accept a longer period of lower oil prices in order to protect its market share against the US shale boom. EIAOil prices have fallen by some 34% since June on the back of huge additional supply from the US shale boom as well as record output from Russia and surprisingly strong production in the troubled regions of Iraq and Libya. In particular Venezuela, Iraq and Iran have all called for production cuts to support prices as the falls hurt their fragile domestic economies. Outside of OPEC Russia and Nigeria have also been agitating for a cut, with lower oil revenues taking their toll on national budgets. A meeting between Saudi Arabia, Venezuela and non-OPEC oil producers Russia and Mexico on Tuesday failed to result in any agreement to cut production levels. For some more vulnerable countries further price falls even in the short term could be disastrous.

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