Non-OPEC producers due to cut output
Non-OPEC producers can be expected to come to terms with the oil cartel's demands and slash output before a January deadline, but a price war remains a possibility, Saudi analysts predicted today.
Ministers of the Organisation of Petroleum Exporting Countries on Wednesday agreed to cut their production by 1.5 million bpd from January 1st, on condition that major non-OPEC producers like Russia, Norway and Mexico cut theirs by half a million bpd.
Mexico announced late Wednesday that it will cut oil exports "up to 100,000 barrels a day" from January 1st, if OPEC confirmed its conditional cut.
But Russia reiterated Friday that no one could tell it how much oil to export.
"I believe that all producers are convinced of the need to avert a price war, because it is not in the interest of anyone," said oil expert Abdullah bin Ali of the Arab Petroleum Investments Corporation.
"But we cannot be certain that a price war is a remote possibility. If it happens, it will have major adverse consequences on all oil producers," Ali noted.
On Thursday the price of crude oil fell below $17-a-barrel for the first time since June 1999 after the OPEC decision, but recovered to $17.31 dollars on Friday.
Oil prices have fallen dramatically as major world crude producers have chosen to chase market share rather than price stability at a time when a supply glut is swamping a market undermined by falling demand.