OPEC struggles with falling oil prices, as bubble deflates

VIENNA, September 7, 2008 (AFP) – The question facing the OPEC oil producer group which meets Tuesday is when, not if, to cut its oil production target as crude prices slide in the face of weakening economic growth, analysts say.

Most analysts surveyed by AFP expect the 13-nation cartel to agree to trim its output informally at its meeting before waiting until later, possibly at a scheduled gathering in December, to alter its official target.

The trimming will be achieved by members, mainly powerhouse Saudi Arabia, agreeing to cut their excess production above their OPEC quota, which would remove oil from the market but not amount to a formal change in policy.

Under fierce pressure from the United States, Saudi Arabia agreed in May and June to increase production to help calm the runaway crude market which reached a pinnacle on July 11, when crude struck 147 dollars a barrel in New York.

“Even Saudi Arabia doesn’t want the price to come down too much,” said analyst Manouchechr Takin at the Britain-based Centre for Global Energy Studies (CGSE) referring to the moderate and pro-US Middle East producer.

The stakes are entirely different to the last time OPEC members met in March, when crude prices had broken