Word: opec
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...desperate attempt to halt the drop in prices, members of OPEC gathered in Vienna over the weekend and announced an agreement for a modest production cut of 200,000 bbl. a day to 18 million bbl. a day. It is the first time the members have agreed jointly to curtail output in order to stabilize prices. Nevertheless, a number of OPEC states are already badly in need of cash, and will be sorely tempted to increase production in the weeks and months ahead...
Over the years, OPEC ministers have had no trouble raising prices to sky-high levels. Now, however, the world is awash with excess crude-2 million to 3 million bbl. of unused oil per day-and the production cuts necessary to firm up the market are more than some members have so far seemed willing to bear...
...country is Nigeria, which is burdened with a population of 80 million and a superambitious agricultural development program. In a desperate move to boost sales, the government last week threatened to slash a full $5 per bbl. off its officially quoted $36.50 price, in order to compete with non-OPEC oil from the North...
Saudi Arabia, which produces 40% of OPEC's oil, holds the key to any agreement that would keep prices from plunging still further. The Saudis could dry up the supply glut singlehanded by slicing their output, now at about 7.5 million bbl. per day, to 5 million bbl. But the House of Saud cannot go below 6.2 million bbl. per day without dipping into capital reserves to finance a variety of ambitious construction and industrialization plans. The Saudis are also reluctant to step out on a limb within OPEC. Says Lawrence Goldstein, research director of the Petroleum Industry Research...
...balance, some oilmen think that the best possible outcome of the Vienna meeting would be no agreement at all. Instead of the familiar spectacle of cartel members announcing yet another price increase, OPEC's quarrelsome ministers may simply head home in scowling silence, sending the price of oil down even more...