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Despite Delaying Decision, OPEC Likely To Cut Oil Output

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The Washington Post

Published: November 30, 2008

Updated: 11/30/2008 12:55 am

The Organization of the Petroleum Exporting Countries on Saturday delayed a decision on whether to cut the cartel's oil output, but demand that is falling in the United States and unexpectedly weak in China makes it likely that the group will lower production at its Dec. 17 meeting in Algeria, analysts and OPEC ministers said.
Saudi King Abdullah said in an interview published Saturday in a Kuwaiti newspaper that $75 a barrel would be a "fair price" for crude oil, well above Friday's closing price of $54.43 a barrel on the New York Mercantile Exchange but far below price levels OPEC was dealing in just four months ago.

Whether OPEC can arrest the slide in oil prices is a key question for everyone from U.S. motorists to giant oil companies, many of which are shelving high-cost oil exploration and development projects.

In Canada, where oil tar sands projects would be worthwhile only if prices were higher than they are today, plans for expanded production have been postponed. Saudi Arabia has postponed plans to develop the Manifa oil field, which could produce 900,000 barrels a day of heavy crude oil.

The prospects for economic growth are highly uncertain and because of shipping time the effects of recent OPEC output cuts are still taking effect, making it difficult for the oil cartel to match production to demand and stabilize prices.

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