So here’s how it went for the oil companies:
1. Lots of demand
2. high prices for oil
3. everyone complains
4. global economy collapses
5. demand decreases
6. price of oil decreases
7. oil companies complain
And so OPEC has agreed to cut production for the first time in two years. If supply shrinks to demand, that might solve the problem.
Here’s more, from Bloomberg:
- The Organization of Petroleum Exporting Countries cut oil production targets for the first time in almost two years as the group battles to slow a collapse in prices.
- OPEC decided to lower supply by 1.5 million barrels a day from November, oil ministers said today at the end of a meeting at the group’s Vienna’s headquarters. The reduction will be from the existing quota for 11 members of 28.8 million barrels a day.
- “Demand is significantly less than what is being supplied, that is the reason the cut was taken,” Saudi Arabian Oil Minister Ali al-Naimi said after the meeting. Crude oil has tumbled 57 percent from a July 11 record of $147.27 a barrel as the financial market crisis spreads, job cuts increase and fuel consumption slows. Prices fell as much as 7.7 percent today.
Read the full story here.
