OPEC Thinking About Cutting Oil Production

Since oil prices peaked at their high of $150 per barrel, they have taken a nosedive of 30% as of late. So, oil ministers from OPEC are debating whether or not to cut oil production in order to stabilize its price. While no major cutbacks are predicted, a move like this could not have been dreamt of in July as the price of oil was breaking records. However, oils bull run seems to be dying down. This will lead OPEC’s 13 ministers to begin looking into new options when they meet Tuesday.

This is mostly due to the fact that, while oil was worth $147. 27 on July 11th, its price has plummeted by 27% or $40. At that time, OPEC ministers stated they were producing enough oil to meet demands while blaming the weakened U.S. dollar and speculators for the astronomical rise in crude prices. Since then, our dollar has grown stronger, speculators have begun to loose interest and because of stagnant economies, worldwide demand has wavered as well. This sounds good for Class A truck driving jobs and CDL truck driving jobs as well.

Crude oil scheduled for delivery in October fell $1.66 and finally rested at $106.23, which was the lowest close for it since April. Hence, OPEC member Iran has made it known that they would like to lower OPEC’s total daily output of 30.5 million barrels. Venezuela also has their own take on reducing oil production. They want to use the $100 barrel of oil price as bottom line price before they will reduce production. As well, the Saudis have a rock bottom price of $80 per barrel before deciding to take action. And even then, since the Saudis produce roughly 1/3rd of OPEC’s total output and set most of the OPEC policies, large cutbacks are highly unlikely.

Not to mention the fact that OPEC should be a bit mindful of the situation they are in. For example, foreign and U.S. consumers alike would be a little perturbed if OPEC did cut back output too much. Also, as they are quite well aware of, they need to keep high prices at bay. To do this, they will figure out a happy medium between an acceptable price and high profits. OPEC recently forecasted that, for this year, the worldwide oil appetite will have been reduced by 30,000 barrels daily. They also predicted that overall worldwide demands will decrease to their lowest levels since 2002. And the U.S. Energy Administration concluded that we will see a 3.5% decline for oil-based items and gasoline. Again, CDL truck driving jobs and Class A truck driving jobs will benefit from this.

With such factors in place, some experts have concluded that OPEC will decide to not change its output at all while others believe they may compromise. Seeing as how they produce roughly 40% of the world’s total crude, they may elect to do nothing or they may boldly slash their output levels. However, as the world remains in an economic slump, OPEC may quickly realize that the market cannot bear much at all.