OPEC has announced it will cut 2.2 million barrels from its daily oil production, the largest proposed reduction in the cartel's 48-year history.
The announcement comes following a steep decline in oil prices in recent months as the worldwide economic slump has dragged down energy demand.
Officials from the Organization of Petroleum Exporting Countries, who are currently meeting in Oran, Algeria, want to cut production to raise prices, which have collapsed from as high as $140 a barrel earlier this year.
"Supply is still somewhat in excess … inventories are also higher than normal," Saudi Arabian Oil Minister Ali Al Naimi told reporters. The cut, he said, would "bring things in balance."
The cut was prompted by concerns of dropping demand for oil in the world's largest economies, underscored by OPEC's monthly market report for December, released yesterday. That report cited a drop in 2008 oil demand growth from 1.3 million barrels per day to negative 0.1 million barrels per day -- in other words, the world economy is using less fuel than it was at the start of the year. more
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