Oil Prices Following the Next OPEC Meeting

Oil Prices Following the Next OPEC Meeting

Al-Ittihad, UAE, November 1

By the time OPEC countries hold their next meeting at the beginning of December, a lot of water will have flowed under the bridge of the global economic crisis. The new US Congress will already be elected following the midterm elections scheduled for early November, and the winter that Europe so profoundly fears will already sweep the gas-deprived continent. Christmas and New Year’s Eve will be a little sadder this year, and Santa Claus will not be able to distribute his gifts to children as he usually does – due to either a lack of money or a lack of heating. In addition to this global economic and political downturn, and its impact on standards of living in various countries, OPEC members will find themselves facing several other thorny issues that will necessitate sensitivity and equanimity in the decisions they make. OPEC members have relied on two main strategies these past few years: The first is complete unanimity in their decision and actions, and the second is flexibility in how they operate and respond to market conditions. Following the group’s decision, taken in its last meeting, to reduce oil production by 2 million barrels a day, global oil prices shot up. However, prices have largely returned to their pre-reduction levels since then. Therefore, the world is awaiting the next meeting with much interest, and countries and companies are already basing their decisions on how they expect OPEC to respond to global markets. The expectation is that OPEC countries will work to stabilize the oil market and ensure a fair and consistent price per gallon in months to come. If oil prices surge, it is expected that the group will respond by increasing production to restrain this rise. Conversely, if prices continue to decline, then further reductions in supply will be very likely. Therefore, all options are still on the table for the December meeting. No one expects the group to make decisions that contradict its collective interests. But this doesn’t mean that there is no room for cooperation and negotiation between OPEC and consuming states. This is true today more than ever before, given the vitriolic media campaigns conducted against OPEC following the rise in oil prices. The sharp fluctuations in energy prices aren’t beneficial to the global economy, and both OPEC and non-OPEC states have an interest in finding a healthy middle ground. –Dr. Mohammed Al-Asoomi (translated by Asaf Zilberfarb)

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