Thirty-five years after it shocked the world by hiking the oil price, has Opec now lost its grip?
The cartel is widely expected to cut production at its emergency meeting in Vienna on Friday, in an attempt to prevent the cost of a barrel of oil dropping any further. Yesterday, Iran`s oil minister even declared that the era of cheap oil was over.
The result? US crude fell over $4 overnight, pushing it below the $70 a barrel mark that the Opec president has declared as the floor in the current conditions.
That $147.27 all-time high set in July feels a long time ago.
In more normal times, the threat of Opec throttling energy supplies would send oil futures bounding upwards. But normal times these ain`t, and it`s becoming clear that the global economy is contracting quicker than the likes of Saudi Arabia can rein in production.
Oil experts say that the market has already priced in a one million barrel a day cut, so Opec has to at least match that to avoid sparking another round of selling. Edward Meir, an energy analyst at MF Global, believes that even a 2 million barrel cut would not combat the " demand vaporization" as recession looms. Apart from Saudi, who were the only country to bow to political pressure and increase production this summer, it`s not clear which other countries will feel able to take the financial hit of cutting supplies.
The oil industry is also suffering directly from the financial crisis.
Cash-hungry banks are so reluctant to lend that the credit lines that normally lubricate the oil industry have dried up. The result, analysts say, is that the most powerful retailers are able to haggle prices down, as oil producers are wary of selling to someone else who might go bust before paying up.
All this explains why UK drivers are seeing some relief at the pumps. With Morrisons announcing a 2p cut in petrol last week, other supermarkets are probably in a good position to follow.
