Concerned over declining crude oil prices in the international market, Organization of Petroleum Exporting Countries (OPEC) announced to cut production by 2.2 million barrels a day from January 1. Meanwhile, crude prices touched four year low at $40.06 a barrel in the market. Crude prices were $39.44 a barrel on July 13, 2004 and touched peak level of $147 a barrel in July.

OPEC expects increase in demand following proposed production cut. Crude oil demand declined following global financial crisis and fears of recession. Next meeting of oil exporting countries would be held on March 15, 2009 in Vienna.

Total of 12 Oil exporting countries produce about 40 percent of the world's oil. Now, they will produce about 24.8 million barrels of oil a day hoping improvement in crude prices.

OPEC President, Chakib Khelil said that they want stability in crude rates. Oil prices should not come below $70 to $80. He added, "The impact of the grave global economic downturn has led to a destruction of demand, resulting in unprecedented downward pressure being exerted on prices. Prices could fall to levels which would place at jeopardy the investments required to guarantee adequate energy supplies in the medium to long term."

Meanwhile, USA administration criticized the decision of OPEC and asked it to ensure sufficient supply in the market. White House spokesman, Tony Fratto said, "It's not clear that OPEC's actions will be effective, given the shift in global demand and the ability of OPEC members to meet the cartel's targets. OPEC has an obligation to keep the market well supplied and to consider the health of the global economy, so efforts to limit the benefits of lower energy prices are shortsighted."