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OPEC fails to halt slide
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November 15, 2001: 6:06 a.m. ET
Brent crude falls 35 cents to $18.40 in London, over concerns of price war
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LONDON (CNN) - Ignoring OPEC's conditional promise to help arrest sliding oil prices, oil markets responded with a huge sell-off sending oil prices to dismal levels.
The Organization of Petroleum Exporting Countries has initiated an effort to arrest falling oil prices amid a global economic slowdown, which has been exacerbated by the September 11 terror attacks.
The cartel made a conditional promise to cut its daily oil production target by 1.5 million barrels, or 6 percent, but stressed it would only keep its word if non-OPEC members made deep cuts of their own.
OPEC delegates had called on Russia, Norway, Mexico and other independent oil-producing countries to reduce output by 500,000 barrels.
"We are not putting pressure on others. We are calling for contributions," said OPEC secretary-general Ali Rodriguez .
But OPEC has threatened to go on a price war with independent producers should they refuse to close ranks.
Brent crude for December delivery plunged $2.06 on Wednesday to close at $18.75 a barrel on London's International Petroleum Exchange. In early trading on Thursday, it slipped another 35 cents to $18.40 a barrel.
OPEC delegates continued to talk of targeting the price for the cartel's benchmark blend of seven crudes within a range of $22-28 per barrel. But OPEC's benchmark price was $19.23 a barrel on Tuesday, and analysts said there is little hope of an immediate rebound.
Leo Drollas, chief economist at the Center for Global Energy Studies in London, forecast that OPEC's benchmark price for crude would fall to $18.10 during the first quarter of next year even with cuts of 2 million barrels a day.
"It's a very difficult situation to save, short term. But they have to cut in order to get prices away from disaster levels for them," he told the Associated Press.
But other analysts are not so optimistic, saying oil prices could skid to around $8 a barrel by next November.
Industry analysts said major non-OPEC producers are reluctant to cooperate because the OPEC members themselves have yet to make a serious effort to keep their own quotas.
At present, OPEC pumps at least 800,000 barrels above its daily target of 23.2 million barrels.
OPEC says it has already limited output by 3.5 million barrels a day this year, losing market share as a result, even as other producers failed to take similar action.
"The situation has deteriorated beyond the control of OPEC," Kuwaiti oil minister Adel al-Sabeeh said at OPEC's headquarters in Vienna.
"Without a substantial contribution from non-OPEC (countries), OPEC cannot maintain the prices," Al-Sabeeh stressed.
Nonetheless, Libyan Oil Minister Abdulhafid Mahmoud Zlitni said the group had pledges of non-OPEC cuts totaling about 175,000 barrels a day.
Russia, the world's third-largest oil producer, has offered to make a cut of 30,000 barrels a day.
Later Wednesday, Mexico said it would cut oil exports up to 100,000 barrels per day.
"We'll have a cut of 2 million (barrels) on the 1st of January, I don't have any doubt," said OPEC president Chakib Khelil, who expressed hope that the cuts might even be achievable before the end of the year.
OPEC Ministers, however, refused to name the other countries that have committed to cut output. 
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