27 October 2008 | Jake Kanter
The Organisation of the Petroleum Exporting Countries (Opec) has cut oil production for the second time this year.
During the group's extraordinary meeting in Austria last Friday, the organisation cut production levels by 1.5 million barrels a day. This means total production now stands at 27.308 million barrels a day. This cut is in addition to a previous reduction of 520,000 barrels in September (Web news, 10 September).
It was felt the global financial crisis had reduced demand for energy and the market was currently over supplied, making prices volatile. Opec also predicted demand would continue to fall despite the onset of winter.
Opec added there has been a "dramatic collapse" in oil prices that has been "unprecedented in speed and magnitude". The Opec crude oil basket price was $57.57 (£37.47) today. The group called on non-Opec producers and exporters to make similar cuts to restore "equilibrium" to the oil market.
John Hall, managing director of energy procurement consultancy John Hall Associates, said the decision was significant but not surprising. "I believe Opec is concerned that prices will fall further, in spite of these production cuts, and this is probable but until there is some positive clarity over the global financial situation the position has to remain uncertain. For now I do not believe prices will change significantly without some serious incident in the market."