This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

OPEC Considers Oil Output, Iran-Saudi Rivalry

By GEORGE JAHN

VIENNA (AP) â¿¿ Tough decisions await OPEC oil ministers sitting down this week for a policy meeting. The 12-nation cartel has to deal not only with how much crude to produce for the next few months but must also fill a senior position coveted both by Saudi Arabia and archrival Iran.

With world supplies ample, there is some rationale for curbing output when the ministers meet Wednesday in Vienna.

Oil inventories in the major industrialized countries are high, with an energy boom in the United States resulting in stocks of oil at their most plentiful there since 2008. Meanwhile, the Organization of the Petroleum Exporting Countries is pushing out over 31 million barrels a day. That's substantially more than its official daily ceiling of 30 million barrels and the highest in four years, when calculated over a year.

But other factors suggest there may be no change.

The world economy remains weak, despite some signs of a halting recovery in the United States and a bottoming out in the downturn in China. Reducing output now would spike prices, endangering the fragile recovery and further cutting back on the world's oil consumption.

Then there is the "fiscal cliff." The U.S. risks slipping into recession if hundreds of billions of dollars in expiring tax cuts and automatic spending reductions take effect on Jan. 1. Mideast tensions focused on Syria, Israel and the Palestinians and Iran's nuclear program could also drive up prices, even without any OPEC cutbacks.

As always, the price of a barrel of crude is likely to be the main decider.

The average cost of the group's oil basket â¿¿ a mix of grades produced by OPEC countries â¿¿ has been above $100 a barrel for the last two years â¿¿ a first in OPEC's history. Brent crude, which is used to price international varieties of oil, has also been well over $100 a barrel for this year.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG

Markets

DOW 18,080.14 +21.45 0.12%
S&P 500 2,117.69 +4.76 0.23%
NASDAQ 5,092.0850 +36.0220 0.71%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs