Brent oil, one of the major barrel benchmarks, opened below the symbolic 60 dollar level this morning. It has reached a 20-month low, adding further weight to the argument that inflation may not take off despite governments easing interest rates and injecting liquidity into the sinking world economy.
But OPEC and Saudi Arabia hit the panic button and announced the news that the Saudis, the world’s biggest producer, have already implemented their recently-announced output cuts, slashing exports by 900,000 barrels a day.
However, demand for fuel remains weak, and is forecast to stay slack.
The Saudi move has reassured observers that OPEC is serious about quickly implementing the 1.5 billion-barrel output cut it promised last month. Despite the cartel’s market share, however, it is no longer bossing the market – the market is putting the boot in and dragging prices, it seems, inexorably down.
With US auto sales and factory output at their lowest in a quarter-century, no good news for OPEC is likely soon from oil’s biggest consumer.