Opec strategy to go full throttle begins to backfire

New York

THE costs of Opec's plan to protect members' share of the oil market by out-producing rivals are mounting.

As oil prices slump to six-year lows, the risks of worsening political turmoil are rising in the organisation's most vulnerable nations. This includes Algeria, Iraq, Libya, Nigeria and Venezuela, a group dubbed the "Fragile Five" by RBC Capital Markets Ltd.

The pain doesn't end there. With even Saudi Arabia facing its biggest budget deficit in almost three decades, consultant Petromatrix GmbH says the plan to produce at full throttle was a "strategic mistake". Oil prices slumped to near US$40 a barrel in New York on Aug 14 as a global surplus endures almost nine months after the Organization of Petroleum Export…