Oil prices plunge after Opec meeting

Opec ministers decided not to cut oil production

The price of oil slumped after the Opec oil producers cartel decided not to cut output at its meeting in Vienna

Opec’s secretary general Abdallah Salem el Badri said they would not try to shore up prices by reducing production

There’s a price decline That does not mean that we should really rush and do something he said

Following the announcement Brent crude fell below $72 a barrel, hitting lows previously seen in August 2010.

The 12 Opec members decided to maintain production at 30 million barrels per day as first agreed in December 2011.

We don’t want to panic. I mean it, said Mr el Badri We want to see the market, how the market behaves, because the decline of the price does not reflect a fundamental change

Crude oil prices have fallen 30% since June on sluggish global demand and rising production from the US.

The fall in the oil price has been causing concern for several members of the oil cartel, as most require a price above $80 a barrel to balance their government budgets and many need prices to be above $100 a barrel.

Saudi Arabia and the Gulf states can resist for a while said Simon Wardell, energy expert at Global Insight

They have significant financial assets that mean they can sustain a lower oil price. They can secure their budgets without a higher oil price

Saudi Arabia is the largest producer within the Opec oil producing cartel

Analysts suggest the strategy of maintaining output may be aimed at retaining dominance of the market in the face of increasing shale oil production in the United States.

The shale boom has been one of the drivers behind the decline in the oil price

But as the oil price dips, shale becomes less economical to produce.

If oil prices are allowed to remain low for some time that could cap shale production over the longer term. So keeping oil prices low may in fact make sense for Opec

The Saudis want Opec to remain relevant, said analyst Phil Flynn, speaking before the end of the meeting in Vienna. The only way in their mind is to subdue the US shale producer

Opec accounts for a third of the world’s oil sales