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Oil prices have tumbled by nearly $40 a barrel in just three weeks amid growing signs that demand for energy will slow along with weakening economies around the world. As recently as July, oil was trading at a record of $145 a barrel.
The decline in oil prices could provide a form of stimulus to the economy as consumers pay less to fill up their tanks. If oil prices stay at current levels, consumers would have $250 billion more, over a year, to save or spend elsewhere, according to Lawrence Goldstein, an energy economist. Some analysts expect oil prices to keep declining, perhaps to as low as $50 a barrel in coming months.
The cartel’s producers, who control 40 percent of global experts, could curb their output by about a million barrels a day to try to stem the drop in prices, according to analysts.
It is unclear what price range for oil the cartel wants to establish. But the meeting “sends a clear signal that OPEC is concerned about the speed with which oil prices are slipping away from a preferred price of around $80 a barrel,” said Lawrence Eagles, an oil analyst at J.P. Morgan.
Iran’s oil minister, Gholamhossein Nozari, told reporters in Tehran on Tuesday, “I think the low price is a real damage to the future of production.”
The drop in prices has already created problems for oil producers. Iran and Venezuela both need oil prices at $95 a barrel to balance their national budgets, Russia needs $70, and Saudi Arabia needs $55 a barrel, according to Deutsche Bank estimates. Algeria’s oil minister, Chakib Khelil, said on Thursday that the “ideal” price for crude oil was $70 to $90 a barrel.
In Russia, which is not part of OPEC, the drop in prices is threatening the country’s ability to increase production.
Originally posted by Keyhole
This is some of the best news I've heard in a longgg time!
Originally posted by Sublime620
Prices haven't dropped in relation to the price of crude oil. I'm still paying $3.40 a gallon.
$2.50 gas does us no good if people dont have jobs.