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Saudi Arabia has remained stubbornly quiet in the run-up to the next OPEC meeting on 27 November as oil prices hit yet another four-year low this week. With the price now nearly $40/B down since mid-June, most bets are now on a production cut.
The Vienna gathering is shaping up to be one of the most crucial tests of the group’s coherence since the financial crisis of 2008, when oil prices collapsed, shedding more than $100/B between July and December that year. OPEC at the time responded with a 4.2mn b/d reduction, a decision that helped to lift prices from their slump and paved the way for four years of stability, when prices held more or less steady around $100/B. Again, the numbers this time around don’t lie. Demand for OPEC crude oil is set to fall sharply in the first three months of 2015 and the group has consistently overshot its collective target of 30mn b/d since the last meeting in June. That action is needed is no longer in doubt. The big question mark is which of the 12 members of the producers’ club will bear the burden of a reduction if one is agreed in Vienna.
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