Oil prices fall as OPEC discusses production boosts
The headquarters of the Organization of the Petroleum Exporting Countries (OPEC).
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JEREMY HOBSON: Oil prices are slightly lower in overseas trading this morning. That's mostly because OPEC is holding informal talks that could lead to pumping more oil into the system. The cartel of oil producing nations says it is trying to stabilize the oil market, following the loss of a million barrels a day from Libya.
Marketplace's Stephen Beard is with us live now from London with more. Good morning, Stephen.
STEPHEN BEARD: Hello Jeremy.
HOBSON: What can OPEC actually do about oil prices?
BEARD: Quite a lot. OPEC's got a lot of spare capacity, especially Saudi Arabia. It usually keeps a lot of its available oil off the market in order to keep up the price. So, in a crisis like now, when there's a danger of the price spiraling much higher and damaging the global economy, they can pump more crude. Saudi's have already been supplying an extra 700,000 barrels a day. Now Kuwait, the United Arab Emirates and Nigeria are talking about pumping an extra 300,000 barrels too. So that would neatly replace the 1 million barrels that you talk about to the 1 million barrels a day currently being lost from Libya.
HOBSON: But, Stephen, as you mention those countries I hear countries that are in the region -- as least some of them -- that is in the midst of such upheaval right now. Aren't those countries vulnerable themselves to protests and maybe even revolution?
BEARD: That's the ultimate fear at the back of everyone's mind -- the nightmare scenario -- if Saudi Arabia in particular was to see the kind of turmoil we see in Libya. Leo Drollis of the Center for Global Energy Studies says the consequences would be devastating.
LEO DROLLIS: Armageddon will follow as sure as night follows day. Because it's a huge producer of oil, huge exporter, and it would plunge the world into a recession like we've never seen for centuries.
And for that reason he says it's highly unlikely to happen. The world powers would not stand by and see it happen.
HOBSON: One hopes not. Marketplace's Stephen Beard in London, thanks.
BEARD: OK Jeremy.