OPEC in disarray over plunging oil prices
Wednesday, October 15, 2008 Free Headline Alerts
LONDON — The sharp drop in crude oil prices is testing OPEC's unity and viability.
A leading oil analyst said OPEC could be torn by a dispute between Saudi Arabia and its rivals over production levels.
The analyst, Neil McMahon, said Iran and its allies were pressing for a sharp cut in crude oil output ahead of OPEC's emergency session, scheduled for Nov. 18.
"Saudi Arabia has not joined the OPEC hawks, led by Venezuela and Iran, in calling for another supply cut, and we think we could be witnessing the beginning of the end for the organisation," Neil McMahon, a London-based analyst at Sanford C. Bernstein & Co, wrote in a report Oct. 11.
The price of oil has dropped by nearly 50 percent since July 2008.
Saudi Arabia has been the biggest oil exporter of the oil cartel and remains opposed to a production cut. McMahon said this could drive the price of oil to $60 per barrel.
"Such an outcome would likely create an untenable situation within OPEC and the potential for the organization to cease to work as one body," McMahon said.