OPEC on Wednesday agreed on a deepest-ever net cut of 2.2 million barrels per day (bpd) as of January 1, bringing the total output cut in 2008 to 4.2 million bpd, in another attempt to bolster sagging oil prices under the global economic slowdown.

Yet analysts say it still costs the Organization of Petroleum Exporting Countries (OPEC) several months and even further cuts to harvest at the level it is craving for, ruling out the possibility of a quick fix in the volatile market.

Output slash without surprise

The decision made at the oil cartel's 151st extraordinary meeting in northwestern Algerian city of Oran came without surprise given the previous slump and a succession of pro-cut announcements by oil powers.

Chakib Khelil, OPEC's current rotating president, and also Algerian Minister of Energy and Mines, announced in Oran that the cartel "agreed to cut 4.2 million bpd from the actual September 2008 OPEC-11 production of 29.045 million bpd, effective of January 1, 2009," in light of observing "crude volumes entering the market remain well in excess of actual demand."

Over the past five months, oil prices have witnessed a steep slide in the international markets after a record high of some US$147 per barrel in July 11.

After OPEC's announcement of cut on Wednesday, light, sweet crude for January delivery dropped to the lowest in more than four years of some US$40 in the New York Mercantile Exchange, while Brent North Sea crude for delivery in January stood at some US$45 in London's Inter Continental Exchange, shedding more than 60 percent from its zenith.

Khelil said on December 6 that OPEC, which pumps nearly 40 percent of world's oil, is to cut its oil output in a "significant magnitude" in order to stem the tumbling oil prices. He reiterated on December 11 that the reduction in Oran would be "severe."

OPEC Secretary General Abdalla Salem el-Badri also hinted a further oil output cut. He told Iran's Energy and Oil Information Network in Tehran on December 1 that "the organization is ready to cut production by another million barrel, which is a good amount," adding that "we are all geared towards it."

The sensitive future market has been digesting the expectation of the mega cut, which was mirrored in the recent rallies after the price touched a four-year nadir of US$40 on December 5.

Can OPEC make it?

Despite its fresh ambitions to revive the crude prices, "OPEC has not been successful in being ahead of demand destruction, which has caused a drop in oil prices which is starting to have an impact on non-OPEC supply," Olivier Jakob, an oil analyst at Petromatrix, a Switzerland-based oil consultancy, told Xinhua.

The oil cartel slashed its oil output on September 10 by 520,000 bpd and another 1.5 million bpd on October 24, but in vain. Both of them failed to forge substantial rallies.

The Organization for Economic Cooperation and Development (OECD) forecast in November that the economy of the United States, the biggest oil consumer, will shrink by 0.9 percent next year with contraction in the first half of the year giving way to a "languid" recovery.