Marrakech - With a sharp decline in oil prices globally, differences have developed within OPEC states about how to prevent a further decline, the New York Times reported.
Marrakech – With a sharp decline in oil prices globally, differences have developed within OPEC states about how to prevent a further decline, the New York Times reported.
Brent crude oil fell 1.5 percent on Monday to $88.89 a barrel and several OPEC countries which include Saudi Arabia, Kuwait, Iran, Iraq, and the United Arab Emirates have lowered prices as competition mounts to sell to European and Asian clients.
The price shift could be good news for oil importers such as Morocco where the price of gasoline at the pump was 9 cents lower than a week ago and 14 cents down from its price a year ago. Morocco imports 95% of its energy needs.
Analysts said Saudi Arabia, OPEC’s dominant member, might be rethinking its strategy. The Kingdom may be going for market share rather than attempting to hold the price of a barrel of oil at $100. This could leave OPEC members vying with each other and lowering the price.
In Iraq, another major oil producer, uncertainty remains over oil fields as the ISIS continues to advance recently taking the town of Hit with some of its forces now only 15 km west of Baghdad and the province of Anbar evacuated by Iraqi forces. In Libya, despite the chaotic situation with feuding militias and two governments in Tobrouk and Tripoli vying for control of the country, oil is flowing again and no strikes have been reported.
In the United States, drilling operations have increased dramatically to the point where the U.S. Congress may be asked for permission to export American oil. The world market seems awash with oil and prices are at their lowest since the Arab Spring turmoil in 2011.
American production of shale oil has risen to 8.7 million barrels a day and imports of OPEC oil into the United States have fallen by half since 2008. Both Saudi Arabia and Nigeria were said to be cutting prices for Asian clients last week. It is too soon to say whether the power of OPEC is slipping as the price of oil drops and America becomes more self-sufficient.
The world consumes 90 million barrels a day and according to energy experts, probably a million more barrels are being produced causing a surplus. This could change depending on the situation in Iraq and Libya.
The global oil market is sensitive to shocks and threats like ISIS, but as the Kuwaiti oil minister said recently, the price of oil may rise in the event of a cold winter in Europe.
The lower oil prices could have a bigger impact on one oil producing country, Russia, which has to deal with sanctions imposed by many countries.
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