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OPEC set to cut oil output

business Updated: Oct 24, 2008 15:39 IST
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OPEC is set to announce a cut to its oil output at an emergency meeting in Vienna on Friday in a bid to support crude prices, which are plunging as recession fears hit demand for energy worldwide.

OPEC President Chakib Khelil said yesterday that the oil producers' cartel will decide to reduce production when it meets in Vienna, home to the cartel's headquarters, but was wary of worsening a global financial crisis.

British Prime Minister Gordon Brown recently said that any reduction made in a bid to push up oil prices would be "scandalous" at a time when major economies are close to recession.

However ahead of the gathering, Iran -- OPEC's second biggest oil exporter -- and Libya both called for a reduction of two million barrels per day, while Venezuela said there should be a cut of at least one million barrels.

The price of New York oil dived yesterday to a 16-month low point, as recession fears stoked concerns about falling crude demand, traders said.

New York's main contract, light sweet crude for December delivery, sank as low as 65.90 dollars per barrel on Thursday -- a level last seen on June 13, 2007.

Crude futures in New York and London have plunged 56 per cent from record highs of above 147 dollars a barrel reached only three months ago when supply concerns sent prices soaring.

"The market has priced-in a one million barrel per day supply cut" by OPEC, BNP Paribas analyst Harry Tchilinguirian said ahead of on Friday's meeting.