Oil cartel plans production cuts

OPEC is discussing substantial production cuts in the supply of petroleum in order from preventing prices from falling further.Some analysts are going so far as to predict a fall back to 30 dollars a barrel if the production cuts are not implemented.The central role of the cartel in governing world oil prices and thereby price levels generally in the western economies ought to be transparent by now but I'm not sure that central bankers properly understand this.

Countries like Japan which import 85% of their oil from the Middle East are worried about Chinese competition for oil supplies in Iran where the Japanese have been negotiating an oil deal to develop a 26 billion barrel field. As China develops rapidly its appetite for steel, concrete and oil will grow.It already consumes something like 29 % of the world's steel production. Countries like Canada with shortages of capital but huge supplies of oil will continue to be of great interest to the Asian emerging superpower.A bidding war for Canadian energy between the US, Japan and China may well emerge.The problem for Canada in addition to the shortage of capital is ecological as most of our future   oil is now in the tar sands.
How the cartel handles its cut back in production and how the central banks handle the shift to falling oil prices will be of major interest in the months to come.