OPEC slashes production as oil prices sink

VIENNA, Austria – OPEC said at an emergency meeting Friday that it will slash oil production by 1.5 million barrels to stem the “dramatic collapse” of oil prices, but crude prices plunged 5 percent anyway as financial markets spiraled downward across the globe.

Oil futures slid $3.33 to $64.51 a barrel on the New York Mercantile Exchange. Prices at one point tumbled to below $63, prices not seen since June 2007.

Demand for crude has evaporated and the supply levers held by the Organization of Petroleum Exporting Countries appear to have little influence in the current economic climate.

Iran and Venezuela pushed for a cut of 2 million barrels a day, but there were concerns among other OPEC members that a more severe production cut would exacerbate a deteriorating economic crisis and further destroy demand.

The world’s biggest crude consumer immediately blasted OPEC.

“It has always been our view that the value of commodities, including oil, should be determined in open, competitive markets, and not by these kinds of anti-market production decisions,” White House deputy press secretary Tony Fratto said Friday.

OPEC is already producing 300,000 barrels a day above its own quota of about 29 million barrels.

If that overproduction is stopped, and all members comply with the 1.5-million cut, OPEC would produce about 1.8 million fewer barrels of oil a day.

OPEC officials, however, left no doubt that they were ready to slice production again quickly if Friday’s decision does not end the price freefall.

The emergency meeting was initially scheduled for Nov. 18, but that was abruptly rescheduled for Friday in response to prices that have entered a tailspin since their historic high of nearly $150 in July.

Crude has tumbled 56 percent since then. A barrel of oil costs $41 less than it did just 30 days ago.

OPEC President Chakib Khelil said OPEC was ready to convene another emergency session before its next planned gathering in December in Algeria “if there are further decisions that have to be made.”

Analyst John Hall of London-based John Hall Associates said the OPEC decision will not have a dramatic effect, adding he assumed any upward trend would stop at between $80 and $90.