OPEC would cut oil output at below $80 - source

by Simon Webb Thursday, 09 October 2008

OPEC is unlikely to cut output at its meeting in December unless the price for crude produced by its members falls below $80 a barrel, an OPEC source said on Wednesday.

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The price for OPEC's basket of crude stood just above that threshold on Tuesday, at $80.04 a barrel. US crude, which trades a few dollars higher than OPEC oil, slid to a 10-month low on Wednesday on concern that the international financial crisis would have a major impact on demand for energy.
"The price is still reasonable," the source told Reuters. "If it stays where it is then OPEC will stick to the output levels decided at the last meeting. I think if it falls below $80, OPEC will do more."

Several members of the Organization of the Petroleum Exporting Countries have voiced concern about demand and the falling price. Nigeria was the latest on Wednesday, with its minister saying OPEC may need to intervene to balance markets.

"Those are the non-Gulf countries, this is their usual concern," said the OPEC source.

Core Gulf Arab OPEC members typically base their budgets on more conservative oil price expectations than members such as Nigeria and Iran.

Even if the price fell through the $80 mark, OPEC was unlikely to take action before its next scheduled meeting in December, the OPEC source said.

The global financial crisis and slowing demand growth were a concern, but the lower oil price should bolster consumption, the source added. (Reuters)



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