OPEC representatives are still warning about a possibility of a crash on the world market of oil. OPEC experts say the uncontrollable reduction of prices may take place in the beginning of the next year in case, if the countries that produce oil fail to agree to cut its supply on the market. There has been no agreement achieved on this yet, and all the attempts on this matter ended up in failures.
The OPEC meeting in Vienna, where the question on reduction of oil extraction was considered, did not bring a result. There was a split within the oil exporters, and that may lead to serious consequences for the world economy. Venezuela, Iraq, Indonesia and Quatar agreed to cut the level of their oil extraction, but other members of the organization did not support them. Russia, Norway, Mexico and Angola are those, who disagreed with the suggestion.
The presidents of the mentioned countries communicated with each other and acted on the top level and they all agreed, their countries were not going to reduce the oil extraction. For the time being Russia produces over 7 million barrels of oil daily, having increased the production of oil by 500 thousand barrels a day over this year. According to the information from the International Energy Agency, Russia is likely to raise the oil production volume the next year and 400 thousand daily barrels will be added. This will be the figure close to Saudi Arabia’s - the largest oil manufacturer in the world.
In this situation it is very hard to hold the oil prices. OPEC controls 40% of the world oil, so it can not dictate its conditions to other gamblers of the oil market. Russia refused to obey the OPEC’s rules and gave up the previous agreements with this organization.
The Russian economy is rising now, the oil companies are increasing their output and it is just a criminal thing to do - to do, what OPEC offers. Like specialists say, the slowdown of the American economy is a temporal phenomenon and the oil, which has been saved in America, will soon be over. Due to the military conflict, the American troops in the Central Asia will have to be increased, which will also have its influence on the price policy. The oil price got closer to the level, which is a critical one to the Russian economy: $18.5 per barrel. With this price one may forget about the extra budgetary revenues. If the price goes even lower, then the budget will have to be revised. Neither the government, nor the Russian parliament want it.
Dmitry Litvinovich PRAVDA.Ru
Reuters photo: Venezuelan President Hugo Chavez shakes hands with Vladimir Putin during their meeting in Moscow, October 22, 2001. Chavez arrived in Moscow on Sunday to discuss the situation on world oil markets with Putin and other officials