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From all indications, OPEC appears to be making a serious effort to reduce production and exports in the face of falling prices. The Saudis are reported to have cut exports by 900,000 b/d from their August peak; the Kuwaitis say they have cut exports by 100,000 b/d; Venezuela says it has notified customers of cuts totaling 129,000 b/d; Shell says it is cutting its exports from Nigeria by an unspecified amount despite the country’s spotty record of meeting its quota; and the Indians say that Iran, Kuwait, and the UAE have reduced shipments by 5 percent.
As world crude prices are now hovering around $60 a barrel, the average prices received by OPEC members could soon be in the low $50’s, suggesting that the production cuts at the last two OPEC meetings are not as yet having the desired effect.
OPEC’s Secretariat in Vienna is currently holding talks with its members on the state of the oil markets. There is a possibility of a second emergency meeting being held before the next regular meeting on December 19th. OPEC’s President is already suggesting that there will be a third production cut at the next meeting if prices remain under $70 a barrel.
In the meantime, Russia seems to be backing away from reports that Moscow will cut production in concert with OPEC. Finance Minister Kudrin said over the weekend that “the government isn’t planning any restrictions of oil production in the near future. Oil businesses should estimate their own risks.” At the same time, the CEO of pipeline company Transneft said that exports in November are only three quarters of planned. The company blamed high export duties on the reduction in shipments and said lower exports will only be temporary.