CRUDE oil prices have fallen in recent days as Opec decides not to cut production. In London, the December Brent contract fell by 1.07 to $1768 a barrel on November 14. In New York, December Nymex fell $2.29 to $17.45 a barrel after reaching a fresh two year low in the day. Opec’s crude oil basket price plunged to $16.19 a barrel on November 15 from $18.09 the previous day.

Opec agreed to lower production by 1.5 million barrels a day in January, on the condition that non-Opec producers also cut by 500,000 barrels a day. Opec has commitments from Mexico and Oman, but larger producers — Russia and Norway — remain opposed to production cuts.

Analyst said that Russia was not likely to be pressured into making the cut but a political solution would have to be found so that it was not seen to be giving in to Opec.

Although Opec’s decision prompted fears of oil prices plunging to $10 as in 1998, analyst doubted that would be the scenario this time. “Prices could fall to $15 in the short term if the Russians hold out,” said Lawrence Eagles, an analyst at GNI.

Brokers Lehman Brothers cut its 2002 Brent oil forecast to $17 a barrel from $22 because if does not expect non-Opec producers to meet the organisation’s demands for the production cut.

Kuwait warned that oil prices could tumble as low as $10 a barrel as the dispute between Opec and Russia over production cuts continued and prices fell to their lowest levels since mid-1999.

Opec producers in the Middle East can pump oil more cheaply than non-Opec countries, including Russia, which is a target for the Opec action. In the wake of the September 11 attacks, the oil price rose to $31 a barrel on fears of widespread US retaliation in the Middle East. But prices have since declined as the US has confined its campaign to Afghanistan.

Opec ministers said that Vienna declaration made it clear that Opec — which has already reduced its quotas by 3.5 million barrel per day this year — would not to on cutting alone.

Opec is putting pressure on Moscow because Russia, already the world’s third largest oil producer, is increasing output and exports faster than any other no-Opec country.

Oil prices fell further after Russia failed to offer much hope that it would meet Opec’s demands and join the group in making supply cuts. In the London market, price of oil had fallen to $16.65 a barrel, a two and a half year low on November 19 before rising slightly.

Oil prices slumped below $10 in late 1998 and early 1999 before Opec, with the help the Mexico, took enough oil off the market to lift prices. Russia at the time paid lip service to the idea of cuts but, beyond normal seasonal export changes, made no effort to rein in output.

Opec this year already has cut output close to the lows of mid-1999, removing 3.5 million pbd, but has failed to prop up prices, because of growing non-Opec output and faltering demand hurt by slowing world economic growth.

Cheaper oil should help spur a recovery in the world economy and revive demand for oil. Some economists calculate that if oil were to average $15 a barrel next year, down $10 from this year, it would add about 05 per cent to world economic growth.