OPEC ministers meeting in Algeria have agreed to slash daily output by 2.2 million barrels a day from the start of the new year. That is OPEC’s biggest reduction ever as its members try to halt a collapse in the cost of crude. OPEC Secretary General Abdallah al-Badri said that bring the total of cuts since September to 4.2 million barrels a day. Russia and Azerbaijan attended the meeting as observers and said they could rein in exports in future, but stopped short of am immediate pledge.
In Moscow, Alfa-Bank energy analyst Shirvani Abdoullaev said the producers have to be careful how much they cut: “If technically they remove say four million barrels per day, which some OPEC members are suggesting, then really the oil price could move higher short term, but it will really probably destroy long-term demand for oil in general.” Oil prices have tumbled as financial turmoil has slowed global economic growth and hit fuel demand. The cost of a barrel has dropped more than 100 dollars from the all-time record in July above 147 dollars.