OPEC Cutting Oil Output If Oil Goes to $80 - 10/13/08

If oil falls below $80 a barrel OPEC will most likely cut output in December.  If it stays above $80 they most likely will do nothing.

On Tuesday the price of OPEC’s basket of crude stood just around the $80 a barrel mark.  U.S. crude which trades a few dollars higher than OPEC, slid to a 10 month low Wednesday on fear the International financial crisis would have a great impact on demand.

A number of members of OPEC have voiced concern about the demand and the falling prices.  Nigeria’s minister said OPEC may need to intervene to balance markets.

Non-Gulf countries that are members of OPEC normally voice their concern during these periods.

Core Gulf Arab OPEC members normally base their budgets on a conservative oil price unlike non-Gulf members, Nigeria and Iran.

OPEC sources say even if oil falls below $80 a barrel OPEC would not take any action until its next meeting in December.

Slowing demand has been a concern, but lower oil prices should raise consumption.

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