OPEC in rush to reverse falling oil prices

Reuters:

OPEC oil ministers met yesterday to remove a record 2 million barrels per day from oil markets in a race to balance supply with the world’s rapidly crumbling demand for fuel.

The 12 members of the Organisation of the Petroleum Exporting Countries were also aiming to build a floor under prices that have dropped more than $100 from a July peak above $147 a barrel.

As the ministers convened a meeting, which was expected to proceed smoothly, oil was trading just above $44 a barrel.

Saudi Arabia, the world’s biggest oil exporter, has led by example, reducing supplies to customers even before a cut has been agreed to help push prices back towards the $75 level Saudi King Abdullah has identified as "fair".

Ali al-Naimi, the kingdom’s oil minister, was first to publicly call for curbs of 2 million bpd ahead of the meeting.

"The purpose of the cut is to bring the market into balance and avoid the gyrations of the price," he said. "The cut may lead to higher prices or may not."

Others in the group that pumps more than a third of the world’s oil said at least two million barrels needed to go from daily output to prevent a massive build in inventories. "A minimum of two million we think needs to be cut so we can balance the market," Iraqi Oil Minister Hussain al-Shahristani told Reuters.

The expected cut, the third this year, would bring a total reduction in OPEC supply to four million bpd.

Meanwhile, some local pump stations are experiencing fuel shortage, with some having gone without the commodity for two days running.

In Nakuru, Shell, Total, and Kobil petrol stations did not have super and diesel fuel brands yesterday.

However, other stations like Caltex, Triton, National Oil Corporation, and Delta had fuel. Despite the shortage, most of the stations did not hike prices.

Super sold for between Sh78.8 and Sh79.9, while diesel was going for between Sh71.9 and Sh74.

An attendant at Total petrol station who did not want to be named said they ran out of super on Sunday and diesel on Monday.

"We do not know for how long we will wait to get the fuel," he said.

Another attendant at Hyrax Shell petrol station said they ran out of fuel on Monday evening and were yet to refill their tanks.

"We get our fuel from Mombasa, we are not sure when the fuel will be transported to this place," he said.

He said they had tried to get fuel at the Kenya Pipeline depot in Nakuru but were discouraged by a long queue of trucks waiting to refill.