Oil prices fell to a new eight-month low below $58 a barrel on Wednesday (Oct. 11) as doubts grew that there is a consensus within the Organization of Petroleum Exporting Countries (OPEC) for an immediate output cut, according to an Associated Press report.
Since July, the cost of crude oil has plunged by more than $20 amid rising global inventories, concerns about economic growth and a milder-than-anticipated hurricane season.
Against this backdrop, the president of OPEC, Nigerian oil minister Edmund Daukoru, says there is a need — and an agreement — to cut production by 1 million barrels a day starting next month.
But Saudi Arabia, the country whose participation is necessary to make any significant output reduction, has not publicly confirmed this.
“The market just doesn’t believe” a supply cut is imminent, said Societe Generale’s director of commodity strategy Michael Guido.
Indeed, OPEC members appear to be divided over what is an appropriate price level for the cartel to try and defend by reducing its output, analysts said.
Price hawks within OPEC, such as Venezuela and Nigeria, have made it very clear over the past week — through a barrage of public comments — that they are quite satisfied with world oil prices hovering around $60 a barrel.
Saudi Arabia, on the other hand, has made it known — by remaining mostly silent — that it is not interested in attempting to prop up prices just yet.
The country’s ambassador to the United States, Turki al-Faisal, said last week that Saudi Arabia seeks a “reasonable level” for oil prices that will not hurt global economic growth.