Oil Production Reduction And Price Fall Is Healthy
OPEC announced a cut in oil production by 1.5 million barrels per day in the hope that a reduced supply would offset the reduction in the price of oil and artificially inflate it again.
The reduction in demand for oil is a much needed reality check. Even SUV drivers in the USA have had to accept that there are better ways to move from A to B. As I said a couple of days ago, we all need to make sure that with oil prices lower, we don’t go back to our old oil burning ways.
Despite the production cut, oil has seen a drop in price by 5% which is an interesting thumb in the eye for OPEC. No doubt they will meet again soon to discuss further drops and iran, in particular, will be desparate to see the price rise again.
This article on the BBC website says that Iran will suffer a budget deficit if the crude price falls below $75 a barrel, so in two years, Iran has become completely dependent on the vastly inflated price of oil.
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