Filed under: International markets, Rumors, China, Middle East, Economic data, Commodities, Oil, Recession

As we discussed earlier this month, U.S. President George Bush embarked on a Middle Eastern tour to urge OPEC countries to raise production at their meeting this week, but signs are starting to indicate that the next move the oil cartel makes will actually be to reduce its production output.

With oil prices recently breaking through the $100 barrier, Bush pleaded his case that unless OPEC decides to lift production that high oil prices will create slowdowns in all consuming countries this year. The administration is praying for a cut at this week’s meeting, but according to the Wall Street Journal(subscription required). the oil cartel is more likely to cut production this spring if demand start to diminish.

It is a tough situation in which the cartel finds itself. With recession fears starting to spread regarding the U.S. economy, OPEC has to worry that a slowing American economy will crimp global demand. On the other hand, if they do not boost output then the impact could even worsen a potential recession and reduce demand even more.

Continue reading Will OPEC actually opt to cut its production quotas?

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