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NEWS: OPEC Agrees to an Oil Supply Crackdown: Will Cut 1 Million Barrels A Day

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posted on Dec, 10 2004 @ 08:45 AM
The oil cartel OPEC has agreed to reduce excess supply despite oil that was been trading at near high levels. Over 1 million barrels of oil will be taken from production starting January 1. They would meet again at the end of the month to see if further cuts were needed. Most of the cuts would come from Saudi Arabia which is currently over 800,000 barrels a day above its quota.
CAIRO (Reuters) - OPEC oil producers on Friday agreed to stamp out excess supply that has lowered world prices from record highs.

Ministers said they would to withdraw one million barrels daily of surplus production over an existing target from January 1 and meet again on January 30 to discuss whether further cuts were necessary.

"Stocks are building up at a unreasonable rate, This is a preventative measure. It is enough to sharpen the market," said Algerian Energy Minister Chakib Khelil.

The decision will disappoint consumer nations which have urged OPEC not to pull back from a surge in production, saying oil inventories must rebuild to underpin economic growth and calm volatile prices

Please visit the link provided for the complete story.

Here is the funny thing. Most of OPECs oil is purchased under long term contracts with major oil companies. While the press has been vilifying OPEC, it seems the oil companies are the ones that have been gauging us. The price we here batted around in the media is the futures market. The price is purely speculative and is largely a function of psychology. Supplies factor in as well, but one only has to look at the record profits the oil companies are making and have to wonder.

[edit on 12/10/04 by FredT]

posted on Dec, 10 2004 @ 09:12 AM
yes, your quiet right, on the surface it does look like price fixing by the larger oil companies, But i do think there's more to it. Throw in the devaluation of the US dollar and the US govts failure to do anything about it and countless other factors and you'll probably find a global conspiracy there.


posted on Dec, 10 2004 @ 09:23 AM
Just a bunch of money grubbing rich bastards trying to get richer
These guys make me sick. However, American dependance on foreign oil makes me even sicker. If it wernt for the rich politicians, we wouldnt be driving cars that run on gas right now.

posted on Dec, 10 2004 @ 09:38 AM
I agree, prices that we pay are based on speculative investing.
Sometimes just plain ol news can cause gas distributor's to jack up the prices.

But as OPEC begins to 'clamp down' on production, one has to wonder why?

Are they trying to cause the price of oil to rise?..or are they preparing for an eventual glut on the market, that may soon become publicly obvious? (and lowering production now to dampen the fall of the value) (remember the oil 'shortage' in the 70's?)

With the US oil reserve just about topped off, and soon to be declared full, the single most regular customer may soon be losing interest in continued 'excess' purchases.

With the Iraq war winding up (more or less) vastly increased production level's from Iraq ready to glug into the market, have to be expected soon.

With China as a major energy consumer now, their 'industrialization' of it's country may also well provide for expanded Chinese oil exploration and production that would possibly reduce their outside sourced needs.

It seems to be becoming much clearer, that any apparently illogical reductions by OPEC are in fact possibly preparing for a surge in worldwide production instead, as well as a reduction in demand for reasons other than consumer usage.

posted on Dec, 10 2004 @ 09:42 AM
You make a good point. The U.S. Petroleum reserve is at record levels. The only thing they could do is to up the percentage of sweet light crude vs. heavy but thats about it. If there is a glut pending, where is the additional production come from. No doubt once the US stops pumping into the strategic reserve, that will free up some supply, but where else? The only country in the world with excess production capacity is Saudi.

posted on Dec, 10 2004 @ 09:58 AM
OPEC has to increase the price of oil through reduction on supply, because they are getting less for the US Dollar. I suspect that the US Government are allowing the Dollar to slide to 'pull into line' the states, (which lets face it the whole world economy use the Dollar as THE currency to do business in.),who have stepped 'out of line' i.e. European countries for not backing the war, Oil producing states etc. etc.

[edit on 10-12-2004 by spacemunkey]

posted on Dec, 10 2004 @ 10:12 AM
Yes, Saudi Arabia is the only one at the moment that can say excess production,... but only by the similar amounts that they are now declaring a reduction of. (approx 1m bbl)

An interesting quote, and link,...

According to the Energy Information Administration's International Energy Outlook 2003, Persian Gulf oil production is expected to reach about about 26 million bbl/d by 2010, and 35 million bbl/d by 2020, compared to about 21.7 million bbl/d in 2000. This would increase Persian Gulf oil production capacity to 33% of the world total by 2020, up from 28% in 2000.

The Doroud 1&2, Salman, Abuzar, Foroozan, and Sirri fields comprised the bulk of Iran's offshore output, all of which is exported. Iran plans extensive development of existing offshore fields and hopes to raise its offshore production capacity sharply to 1.1 million bbl/d from about 675,000 bbl/d currently. In early October 2003, Iran re-launched a tender for eight exploration blocks in the Persian Gulf after receiving little interest from a January 2003 announcement. One area considered to have potential is located near the Strait of Hormuz. Another interesting area is offshore near Bushehr, where Iran claimed in July 2003 to have discovered three fields with as much as 38 billion barrels of oil reserves.

Overall, the Persian Gulf accounted for about 22% of U.S. net oil imports, and 12% of U.S. oil demand, in 2003.

Persian Gulf Oil and Gas Exports Fact Sheet

But these are just the Persian Gulf states. There is Russia and the Yukos issue being resolved, that can also make room for production growth and resale.

In regard to the oil production all major oil enterprises in China have so far maintained a stable or increasing production. The Daqing Oil Field, No.1 oil production base in China is planned to produce 48.3 million tons of oil this year but up to Mar 10 it had actually brought out more than 9.2 million tons. The Shengli Oil Field, No.2 in China has witnessed a stable increase in production for 4 consecutive years. The annual planned output is 26.6 million tons and the production came to 6.5 million tons in the first quarter of the year.

While the domestic production is guaranteed the Chinese government has paid more attention to the strategy of "going out", letting the enterprises to cooperate with foreign enterprises to tap for more oil-shares in the world oil market, setting up overseas oil-supply bases. Up to now, China Petroleum Co. has already acquired oil-shares of 9 to 10 million tons. The registered prospecting area by Shengli Oil Field in Iran has come to 4600 square kilometers.

China's Oil Safety Expected to Maintain Stable

And with China, all the while 'industrializing' and yet to focus on their own reserves as much as a focus on aquiring rights to others' reserves.

posted on Dec, 11 2004 @ 02:27 AM
The oil market seemed unconcerned by the announced cuts and oild slid another 2 dollars a gallon:

NEW YORK Oil prices fell nearly $2 Friday as dealers took profits on a widely expected move by the OPEC cartel to curb production in excess of its official 27 million barrels per day output ceiling.

"People bought the rumor about OPEC cutting production, and now they're selling the news," said Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois.

U.S. light crude futures settled down $1.82, or 4.3 percent, to $40.71 a barrel after hitting a fresh four-month low of $40.25. London's Brent crude fell $2.29 to $37.38 a barrel.

posted on Dec, 11 2004 @ 05:39 AM
If OPEC and/or Saudis let oil prices rise slowly, perhaps that will help nudge the world [especially the US] to conserve fuel use and find alternative energy sources. With China and potentially India oil needs peak oil will only come sooner rather than later.

I don't generally think shocks are good. Does anyone think we need a sharp sudden shock to wake us up? We might. Sometimes it seems to take unexpected change to get people off the dime.

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