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OPEC Output Cuts Roil Stock Markets
Date: 10/24/2008 4:04:39 PM Sender: By VOA News

                                                  OPEC Output Cuts Roil Stock Markets
                                                                             By Lisa Bryant
                                                                                  Paris
                                                                            24 October 2008
  

OPEC will cut its oil output by 1.5 million barrels a day starting in November, with chances of more cuts to come. But from Paris, Lisa Bryant reports the announcement was met by a further drop by financial markets.

OPEC hopes that by cutting output it can put a break on diving oil prices that have been dramatic in recent weeks. Crude oil is selling for 50 percent less than earlier in the year.

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OPEC President Chakib Khelil (L) and OPEC secretary general Abdalla Salem El-Badri (R) at a press conference after an OPEC meeting in Vienna, 24 Oct 2008

The decision to cut output came during an emergency meeting in Vienna. Speaking to reporters afterwards, OPEC＇s president, Algerian oil minister Chakib Khelil, blamed the low oil prices on a drop in demand and on the current financial crisis.

"There are companies that are not able to pay for the oil," he said. "So it＇s not the effect on the financial market, it＇s the effect of the financial market on the supply. If your buyers are not going to be able to get credits from the banks, they are not going to be able to even buy the crude."

Khelil said OPEC may meet again before the cartel＇s planned gathering in Algeria in December and it may cut prices yet again before the year is out. At the moment, OPEC is actually producing beyond its quota of 29 million barrels a day. If it meets its quota and the planned cuts take place it would end up pumping about 1.8 million fewer barrels of oil a day.

Any hopes of an immediate reaction on the world financial markets were dashed. Stock markets plummeted Friday, as fears of recession continue to spread.

                      

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