OPEC to hold an extraordinary meeting February after oil prices rise on Gaza conflict

The Organization of the Petroleum Exporting Countries (OPEC) decided an output cut during its extraordinary meeting on December 17 in Oran, west of Algeria.

• OPEC head, Chakib Khelil said oil markets should brace for a surprise decision on reduction suggesting that output cuts could be deeper than expected.
• The expected output cuts are meant to prevent further falls in oil prices which fell to $40 from a record of nearly $150 a barrel.
• However, the price of oil has risen briefly on fears of heightened tension in the Middle East following Israel’s offensive in the Gaza Strip. 
• US light, sweet crude peaked at $48.68 a barrel, before falling back to trade at $46.44, up 10 cents on the day.
• The price of Brent crude was down one cent at $46.90 a barrel.
• OPEC sources have said that is highly unlikely that the oil producers’ cartel will follow Iran’s call to boycott supporters of Israel.
• Among OPEC’s biggest producers are Saudi Arabia, Kuwait and the United Arab Emirates, all of which have good relations with the United States.
• Iran, one of the 13 OPEC members said it will propose output cut by between 1.5 million and 2 million barrels per day.
• An Iranian military commander had suggested earlier that oil supplies should be withheld to put pressure on Israel’s allies.
• Separately, Iran’s OPEC representative Mohammad Ali Khatibi said that the cartel would hold an extraordinary meeting in Kuwait in February.
• OPEC has already agreed to production cuts of 4.2 million barrels per day, but prices have not risen in response.
• There remains concern among traders about how severely the deepening downturn will reduce global demand for oil.
• Traders have also been worried about the continuing gas dispute between Russia and Ukraine.
• Several EU countries have reported a drop in supplies after Russia cut off gas to Ukraine on New Year’s Day in a row over unpaid bills and a new price contract.
• Chakib Khelil, who is also Algeria’s Energy Minister, said Russia will be represented by Deputy Prime Minister Igor Sechin and Energy Minister Sergei Shmatko at OPEC meeting. The European country is not a member of OPEC but it is a major world oil producer.