Oil prices fell once again following a meeting of members of the Organization of the Petroleum Exporting Countries (Opec).
Prices reached their lowest rates for four-and-a-half years on Friday (November 28th) after the Opec producers' cartel decided not to reduce their output. Brent crude was down to $70.15 (£44.74), a drop of $2.43, its lowest level since May 2010. US crude also declined at the end of the week falling $7.54 to $66.15 a barrel.
There was growing speculation ahead of the meeting of Opec that reductions would be made in the amount of oil produced to help tackle the sliding prices. Nations such as Venezuela and Iraq had shown their support for a move of this ilk but the sentiments were not matched by the United Arab Emirates and Saudi Arabia.
In the meeting, Saudi Arabia supported maintaining production at 30 million barrels per day, originally agreed in December 2011. The move was supported by the other 11 Opec members and the decision was taken to keep the current production level.
While most members need to oil prices to remain above $80 a barrel, Saudi Arabia and some other gulf states are able to maintain a solid performance and balance the books with a lower price. This can be made possible thanks to state financial holdings and other diversified investments.
Michael Wittner, senior oil analyst at Societe Generale, said: "Welcome to the new world of oil. Saudi Arabia and Opec will no longer be the mechanism to balance the market, they have relinquished that role.
"Instead, the market itself – prices, in other words – will be the mechanism to rebalance the market. We cannot overstate what a dramatic and fundamental change this is for the oil market."
Another oil producing nation which was against a drop in oil production was Russia which, despite being a non-Opec member, said it would not be entering into a potential fall in production.
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