OPEC is relying on non-OPEC members such as Russia, Norway and Mexico to help rein in production to stabilise oil prices. OPEC was looking to reduce output by two million barrels a day with over half a million to come from non-OPEC members. Russia, with its huge economic problems, remains the principal stumbling block.

Russia is the world's third largest producer behind Saudi Arabia and the US. It produces around 6.6 million bpd, some nine per cent of total world consumption. The Russian oil industry is highly fragmented and has recently seen the rise of many medium-sized, privately owned oil producers. This makes it very difficult to enforce production cuts.

Many oil analysts believe without discipline within OPEC and no support from non-OPEC producers such as Russia, oil prices could fall to as low as $US15 bbl in the short term. Indeed, Kuwaiti oil minister, Mr Adel al-Sebeih said he would not be surprised if prices hit $US10 bbl.

The plunging oil price is impacting on the share price of local producers such as Woodside, which fell to $12.87, a year low. Oil Search dropped heavily to finish on 93 cents, Santos has fallen to $5.79 with Novus falling to a six-week low of $1.61. BHP Billiton, whose energy division accounted for a third of its earnings, fell to $9.76.

While oil prices have fallen to new lows, the US is quietly preparing for any upheavals in the world's major source of oil, Saudi Arabia. "What we are concerned about is the loss, partial or whole, of Saudi oil," one US official said.

Last week, US President, George Bush, ordered that US 'Strategic Petroleum Reserve' be filled to its 700 million barrel capacity for the first time in its 26 year history.

One analyst said Saudi Arabia's theocracy is on shaky foundations and any upheaval in that nation would send the price of crude "to $US40 to $US50 in the blink of an eye."