World News
Oil Price Control No Longer in OPEC's Hands
Adel Abdul Mahdi, oil minister for Iraq, told Reuters this week that the Organization of Petroleum Exporting Countries (OPEC) will continue its output policy, and that any reduction in the cartel's output would require co-ordination with non-OPEC members.
"We are in a real world, OPEC is not the only producer or the only player, so we have to see what the decisions of others should be - Russia and the United States and other producers.
"OPEC can't take a unilateral decision, for example, to cut production and others ... raise production; either we all go to cut production to really defend prices or we have to wait and see."
Abdul Mahdi justified OPEC's continued course of action by pointing out that "We can't repeat those old experiences of OPEC and then lose both, lose production and the prices, because now many other producers are capable of really raising their production."
Dovetailing the minister's contention that oil price control is no longer an OPEC-only decision is Ben Wright, group business editor for The Telegraph, who argues that OPEC does not have a grand strategy and the key member responsible for the production surge – Saudi Arabia – has no option other than to keep pumping.
Wright explained in the December 21 edition of the Telegraph that when high output caused prices to plummet in the 1980s, Saudi Arabia slashed production but other OPEC countries kept pumping – which caused the infuriated Saudis to produce so much oil that OPEC members felt the pinch and "fell into line."
The editor writes, "Might something similar be happening now?
"It increasingly looks like the reason Saudi Arabia hasn't limited production is because it doesn't trust the other Opec countries to reduce their own quotas."
Wright adds that Saudi low production costs mean it can keep making money until oil hits $20 per barrel, "So it keeps pumping because it doesn't have any other option."
"Perhaps OPEC's not really a cartel anymore," he concluded.
Last week, OPEC downgraded its outlook for global crude oil prices out to 2040, as part of a closely-watched report on global petroleum trends.
Key Bunker Prices More
| VLSFO | MGO | |||
|---|---|---|---|---|
| $/mt | +/- | $/mt | +/- | |
| Singapore | 510.00 | 2.50 | 611.00 | 4.00 |
| Rotterdam | 477.00 | 1.00 | 618.50 | 4.00 |
| Houston | 469.50 | 0.50 | 610.00 | 2.00 |
| Fujairah | 501.50 | 1.50 | 708.50 | 3.50 |
| Global 20 Ports Average | 532.00 | 2.00 | 711.50 | 0.00 |
| Global 4 Ports Average | 489.50 | 0.50 | 637.00 | 0.50 |
| Global Average Bunker Price | 571.00 | 1.00 | 759.00 | 0.50 |
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