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OPEC Scrambles to Assert Control Over Oil Prices
The failure of OPEC members to cut oil output has pushed the cartel to mull new moves to stabilize the price of crude.
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The failure of OPEC members to cut oil output has pushed the cartel to mull new moves to stabilize the price of crude.
Last December the Organization of the Petroleum Exporting Countries and 10 other major producers agreed to trim production equal to about 2% of the world’s oil output. But petroleum prices have dropped even more since then, The Wall Street Journal points out.
One reason, cartel officials concede, is that several members—notably Iraq, Libya, Nigeria and the United Arab Emirates—have ignored their quotas. OPEC’s collective daily output rose by 145,000 barrels last month, soaring above 33 million barrels to near record highs. Increased shale oil production in the U.S. also has helped hold prices below $50 per barrel, less than half their level in 2014.
Now OPEC is mulling a new round of production cuts along with unspecified sanctions against members who continue to ignore their pledges. Group leader Saudi Arabia says it will now hold its daily exports of crude at 6.6 million barrels.
But the Journal says analysts are skeptical of the cartel’s ability to control prices. Some suggest OPEC focus less on production and more on actual exports. The newspaper notes that the cartel’s output fell by 920,000 bpd between October and June, but exports declined by only 120,000 bpd.
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