The Organisation of Petroleum Exporting Countries crude oil basket price has tumbled to a two-year low of US$18.50 a barrel in early London trade last night, putting pressure on the bottom-lines of China's big oil trio.
Opec's lack of action to reduce output and weakening global demand has seen oil prices slump from about US$24 a barrel before the September 11 terrorist attacks.
Under an informal Opec price stability mechanism, if the basket price (derived from prices of various countries) is less than US$22 a barrel for 10 consecutive trading days, Opec can call for a 500,000 barrels per day supply cut to bring it back to a US$22 to US$28 range.
Opec is reluctant to cut output as a prop for oil prices which may deter efforts to revive a global economy weakened by the terrorist attacks. Opec ministers are due to meet on November 14 to discuss global oil supply.
A survey by European brokerage ABN Amro found 20 leading banks and consultancies had a consensus oil price forecast of US$25.40 a barrel this year and US$21.30 a barrel next year.
Analysts have recently downgraded earnings forecasts on PetroChina, China Petroleum and Chemical (Sinopec) and CNOOC.
