Opec cuts cause concern
The Organisation of Petroleum Exporting Countries (Opec) announced at its headquarters in Vienna a decision to cut output on September 1 by another 4 % to 23.2m barrels per day (b/d). The move alarmed large industrial countries, especially the US which is particularly exposed as the world’s largest oil importer.
Opec’s members own about half the world’s oil reserves, and claimed the move to cut production was necessary to stabilise crude prices as the world economy slows. On Wednesday July 25, in late trading in London, Brent had risen by 43 cents to $25.33 while in New York US light crude put on 45 cents to reach $26.76.
Opec has set itself a $22-28 a barrel target band for its range of lower grade crude oils. Despite reaching a high of $35 a barrel nine months ago, the price of some crude oils has fallen to around the $25 mark this week.
Experts predicted that the cuts would mean a shortage in the autumn when oil demand in the northern hemisphere picks up, which would mean a probable increase in prices which would further slow the world economy.
