OPEC has decided to reduce its crude oil output of up to 500,000 barrels a day in a bid to tighten the oil market.
A statement by the Organization of Petroleum Exporting Countries issued after oil ministers ended their meeting Wednesday in Vienna said the organization had agreed to produce 28.8 million barrels a day. OPEC President Chakib Khelil said that quota in effect meant that member countries had agreed to cut back 520,000 barrels a day of excess production.
In a knee-jerk reaction, oil prices in Asia rose slightly after the announcement was made to trade around $104.30 a barrel in Singapore. Analysts are further predicting that the oil prices may swing to the upside as coming storms are expected to hit the Gulf of Mexico where most oil refineries are. This comes after oil prices dropped sharply after a weakening Hurricane Gustav cleared the Louisana coast.
What does this mean for Malaysia?
The effect of this announcement on oil prices is still yet to be clearly seen. However, if the oil prices continue to rise with the reduced production, the increase in inflation which will naturally follow will not be a good thing at all for the Muslims in the country who are looking forward to their Hari Raya celebrations. On the other hand, Malaysia, as one of the biggest oil palm producers in the world may benefit if oil palm prices start to halt their decline in prices after this announcement.
As for the man on the street, he will be watching with bated breath if petrol comes down further on 1 October as promised!
September 11th, 2008 at 8:08 am
[...] fact, the recent announcement by OPEC to lower overall output has put another squeeze on the crude oil market and prices are expected to rise [...]