Oil states urged to prevent any price crash - agency

LESS EXPENSIVE: Oil is down $30 a barrel from its July peak. (Getty Images)

Oil producers should cooperate in the face of a global economic slump to avoid any repeat of a crash in crude prices a decade ago, the United Arab Emirates' state news agency on Monday quoted an OPEC source as saying.

"The source called on oil producers in and outside OPEC to show more vigilance... and cooperation, and to adopt preventive measures and a joint strategy to avoid any sharp fall in oil prices such as what happened towards the end of 1998," the agency WAM said.

Oil prices fell to their lowest levels in a generation in late 1998 following a mild winter, a slowdown in Asian demand caused by a regional economic crisis and increased supplies from OPEC.

The unnamed "senior OPEC source" warned about a possible worsening of the current global economic slump and said studies showed that demand for crude oil could fall significantly in 2009, WAM said.

The agency was reporting from Vienna, where the Organization of the Petroleum Exporting Countries holds its next meeting on Sept. 9.

Oil prices have fallen more than $30 since their peak in July but most analysts doubt that crude prices could ever fall to levels before a recent six-year rally.

Oil plunged more than $4 on Monday as concerns that Hurricane Gustav would cause severe damage to the US oil sector eased after the storm weakened before hitting the Louisiana coast. (Reuters)

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