Russia caves in to OPEC, agrees to bigger cut in oil production

[Logix]

Russia Announces Cut in Oil Exports

MOSCOW (AP) - Russia announced Wednesday that it would reduce oil exports by 150,000 barrels a day beginning Jan. 1, in response to OPEC (news - web sites)'s calls for production cuts to help stabilize petroleum prices.

The announcement followed an earlier decision to reduce oil production and exports by 50,000 barrels a day for the rest of the year, a cut criticized as too small to affect prices. The larger cut was likely to go a long away toward satisfying the Organization of the Petroleum Exporting Countries.


Things were just getting good. Oil's below $20/barrel. This news won't help the price down much further. Oh well, I guess if you live in Alaska and rely your annual permanent fund check, this is good news.

 

[helpme]

Damn, gas was getting close to 99cents in LA.

 

[TallBill]

ehh.. i wouldnt think that 150,000 barrles would really make that much of a difference

 

[tcsenter]

<< ehh.. i wouldnt think that 150,000 barrles would really make that much of a difference >>

In and of itself, it wouldn't. But, when Russia cuts, the rest will cut theirs by a similar amount. OPEC didn't want to be the only one who cut production, because it would drive the price of their oil up, while the price of other sources remained the same. Norway, Russia, South America, Canada, and other non-OPEC countries are cutting production, its almost not worth it for them to produce if they have to sell it at less than $20 a barrel.

Anyone hear about the good old-fashioned price war they had in Dayton? 10 freaking cents a gallon!

 

[shifrbv]

I wonder what happened. A few weeks ago Russia basically spit in OPEC's eye when they said they'd have to cut production. They basically had the attitude that no one was going to tell them what to do. Now a complete turnaround and they'll have to pay a substantial amount for storage.

 

[Double Trouble]

This is always a tightrope for all the oil-procuding countries. Produce (and sell) more, and you make more.... but if all the countries do that, the market is flooded with supply, the price is driven down, and you end up selling more but making less. But then, if you cut production, the price won't go up unless you do it along with other major producers...... at which point it becomes economically beneficial again to become a low price seller. It's an endless cycle, but I think with the price dropping below $20 per barrel, they just decided it made more economic sense for them to help prop up the global oil price level.

 

[Logix]

<< ehh.. i wouldnt think that 150,000 barrles would really make that much of a difference >>

Like, tcsenter said, it's true that 150,000 barrels isn't that much by itself. But, by agreeing to OPEC's demands, Russia is showing that it may not be the rogue nation that brings OPEC to its knees and dirt-cheap gas prices to the U.S.

We could have had some monster-cheap gas if Russia continued to hold out. It's not that 150,000 barrels/day in itself would change world oil prices that much, it's that the world's second-largest oil exporter (Russia) is willing to do what OPEC demands. That's what bothers me.

 

[SuperTool]

I think it's good news. Gas prices need to stay stable, so people can plan their lives both consumers an producers. It is better to have $1.50 gas all the time. then $1 gas one year, and $2 gas the next. Also, Russia needs the cash to pay back it's IMF loans.

 

[drewshin]

i dont think most people realize how lucky we are in the US.

i just came back from italy and gas prices there were $1/Liter, or $4/Gallon.
i dont mind higher gas prices even up to $2/gallon, if it causes people to carpool more, or use public transportation.

 

[b0mbrman]

You talk about $2 a gallon like it never happens...it's often past that here in the Bay Area.

 

[Logix]

[Mr. Burns] Excellent! [/Mr. Burns] This time Norway is sending mixed signals to OPEC.

OPEC Delays Cuts in Oil Production