OPEC has decided to have another extraordinary meeting this month in an effort to keep recessionary demand from sending prices even further down toward $50 per barrel. The meeting will be November 29th in Cairo in conjunction with an Organization of Arab Petroleum Exporting Countries gathering. OPEC’s president, Chakib Khelil, says OPEC plans to defend the price band of $70-$90, but the key question is will Saudi Arabia be willing to cut production enough to make that a reality. Price hawks like Venezuela and Iran would like to lower OPEC production another 1-1.5 million barrels per day (Mbd) but Saudi Arabia hasn’t yet complied fully with the last 1.5 Mbd cut.
The desperation of OPEC to cut further even as winter heating begins leads me to think many analysts at Morgan Stanley and elsewhere may just be right that global oil demand will fall in 2009 for the first time in more than 20 years. The climate change implications would be a much slower growth in global greenhouse gas emissions for the year, giving hope that we can begin to lower global emissions within the next decade.
The EIA weekly oil report coming out tomorrow will shed some light on whether US inventories remain strong as the winter commences (I saw my first few snow flurries here in New York City today). I will report fully on its insight and other major energy and climate news of the day tomorrow afternoon.
Onwards to a sustainable energy transition-