OPEC’s President, Chakib Khelil, who also moonlights as Algeria’s Energy and Mines Minister, made the expected announcement on Saturday, in a keynote speech to an oil industry seminar.
At an EGM on October 24, in Vienna, the thirteen member nations, in reaction to the price of a barrel falling below $70, agreed to cut output by 1.5 million barrels per day (bpd) to 27.3 million bpd in an attempt to arrest the slide.
However, any further output cuts will depend upon the cooperation and commitment of all the member nations in reducing their quotas, not just an enthusiastic few.
Mr. Khelil, said: "If everyone has applied [the cuts] and everything in terms of price stays at the levels we have today, it’s of course clear that we will probably go towards a decision to reduce." An OPEC report, due to be released at the end of November, will disclose whether the member nations have been successful in doing so.
The Western Algerian town of Oran is set to be the backdrop for the Organisation’s next scheduled meeting, on December 17. The unique minister-level meeting has been arranged to deliberate the prospects for the oil markets in the first half of 2009; with the stated objective to try and stabilise the price of oil between $70-$90 a barrel.
As a direct result of sky-high prices, seen in July this year, the average price for Algerian crude for 2008, thus far, has been $108 a barrel. This is a figure that dwarves four –fold the average price for 2001, and is a figure seemingly detached from the lows of $60 a barrel seen last week. Against a tide of opposing opinion the data suggests that the outlook for the oil industry is not as gloomy as the markets would have us believe.
On the New York Mercantile Exchange (NYMEX), on Friday, the front-loaded contract of light, sweet crude for December delivery, told a very different story, closing at $61.04 a barrel. To compound the losses, in electronic over-night trading the contract fell below $60 – a figure deemed simply unacceptable by OPEC – for the first time in 19 months.
The plummeting prices have left certain corners of the industry in disarray. Questions have begun to be raised about the commercial viability of many oil and gas exploration, and production projects across the globe. Many of which were projects conceived of when prices were artificially inflated just a few short months ago.
If the current trend continues, the English language will need to find a number of new adjectives to help describe the unprecedented fall in prices.