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OPEC Delayed Production Cut Announcement

The members agreed to "take any additional action ... to balance oil supply and demand, and achieve market stability" during their Dec. 17 extraordinary meeting in Oran, Algeria

OPEC Delayed Production Cut Announcement

OPEC held off on announcing new oil output cuts yesterday, but its alarm over falling demand and a slumping economy potentially laid the groundwork for a big reduction when it meets again in a matter of weeks.

The outcome of the meeting in Cairo, convened about a month after the group decided to pull 1.5 million barrels per day of oil from the market, seemed unlikely to put a floor beneath crude prices that have fallen by around 60% from their mid-July highs of $147 US per barrel.

King Abdullah, in an interview with a Kuwaiti newspaper, said that would be a "fair price" -- a message echoed by his top oil official in Cairo.

"Eventually, if we want the marginal producer to produce and help the world supply, then we need to give them a better price," Saudi Oil Minister Ali Naimi said.

But it was unclear how the group could realize that target soon, given the lack of action at yesterday's meeting.

Some analysts questioned the wisdom of waiting in light of the current weak oil prices.

"Another dumb move by OPEC, unless of course they want lower crude oil prices," said Vincent Lauerman, OPEC expert and president of the Calgary-based consultancy Geopolitics Central.

Author: Ksenia Kochneva


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