The Organisation of the Petroleum Exporting Countries (OPEC)will fight a slowing global economy by making its third oil output cut this year starting tomorrow.
OPEC agreed the 4 per cent cut in July and is determined to sustain the biggest oil price boom in two decades in spite of the global economic gloom.
Key cartel members Saudi Arabia, Kuwait and Iran have thrown their weight behind the cuts policy in recent days, although they are all investing billions of dollars in new production capacity.
Analysts expect OPEC's latest move to match global supply to demand for the rest of the year, but it disregards fears that its $25 per barrel price target is contributing to the downturn.
"OPEC is fighting an economic slowdown and this is the only way they can support prices," said Mr Gary Ross, CEO of New York-based PIRA Energy Group.
"The jury is still out on whether $25 is sustainable; a lot depends on the duration of the slowdown, the extent of the recovery and what kind of demand response you get," he said.
The 4 per cent cut will take OPEC's oil output to 23.2 million barrels per day, equivalent to a third of world production. It will be OPEC's lowest level since early 1999 when it faced up to low prices with drastic production curbs.
The economic slowdown, which has seen the US economy cool to near-zero-growth in the second quarter, has already stalled industrial output in some Asian countries where OPEC had hoped to see the bulk of demand growth.