Once again, that tried and true saying, "What goes up must come down," is particularly applicable to global oil prices. Compared to late 2000, when the average price for OPEC’s market basket of crudes was hovering near $30/bbl, the rate today is only about $20/bbl. At least half of that decline has come just since the September 11 terrorist attacks on the U.S. Indeed, OPEC’s reference price in early November tumbled below $19/bbl for the first time since July 1999.
The drastic drop prompted reports that OPEC would cut the group’s output quota by 1.5 million bopd when members met in mid-November in Vienna. Regardless of whether that cut is achieved and takes effect this month, the truth is that this organization cannot completely rescue prices on its own. There will have to be some output discipline exerted by Russia and other non-OPEC producers.
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