OPEC's attempt to stem a freefall in oil prices fizzled Friday as global economic fears pushed crude down to lows last seen 15 months ago.
Prices slumped even as the Organization of Petroleum Exporting Countries, gathered for an emergency meeting in Vienna, announced it would slash production by a daily 1.5million barrels. If OPEC members under quota stop overproduction, reduction will be about 1.8million barrels a day. Iran and Venezuela pushed for a cut of 2million barrels a day.
But oil's imperviousness to production cutbacks – the most potent weapon in the OPEC arsenal – reflected the cartel's diminishing control over prices, now driven by the lack of demand rather than supply.
OPEC's statement reflected alarm over the erosion of revenues for oil-producing nations, as did the short deliberations leading to its decision.
“Oil prices have witnessed a dramatic collapse – unprecedented in speed and magnitude,” said the 13-nation organization. “This slowdown in demand is serving to exacerbate the situation in a market which has been oversupplied with crude for some time.”
OPEC warned of hard times ahead for suppliers, saying deteriorating demand “will deepen” in coming months.
In more orderly economic times, any OPEC move to reduce output usually led to an upward spike in prices.
But Friday's oil market reaction reflected a new reality.
With a financial vortex sucking the United States and other major consumers into recession and slowing even booming economies in China and India – oil at discounted prices is not finding buyers.
Crude prices have fallen 56percent from the highs reached in July. Prices have fallen more than $41 per barrel during the past month.