On the eve of the 121st conference of OPEC energy and oil ministers, undisclosed top officials of the international organization inform the world community that quotas for crude oil production will increase after the conference in Osaka. To tell the truth, that is what has been so much anticipated. Have Russian ministers taken this fact into consideration in the budget for 2003, which soon to be taken up in the State Duma?
A RIA Novosti journalist got information about the quota raise from a top-official at the OPEC general secretariat being at a session of the OPEC economic committee in Vienna. The committee should now coordinate all positions before the September 19 conference in Osaka.
It seems that OPEC has no other way-out. If crude oil prices exceed the price corridor fixed by the oil cartel (to tell the truth, they have already exceeded it), joint efforts will require to fill up the increasing oil deficit in the world. OPEC members announce the figure of 1,5 million barrel per day. It sounds strange, because exporting countries decided to profit from the oil rush and have already increased their oil production by 2 million barrel per day. In December 2001 in Cairo, OPEC members declined a slight increase of oil production. But now they will have to legalize the already fixed violation of the quotas. Probably, this is the way how big politics is built on the world oil market.
Results of today’s session of the OPEC economic committee can be easily predicted. However, Venezuela, Kuwait and Iraq insist the quotas shouldn’t be changed. And it is no surprise at all: Venezuela is famous for its greediness. The oil market has already collapsed because of its uncontrolled oil production and export. The reason why Kuwait insists on invariance of the oil quotas is clear as well. Iraq is suffering great losses because of a pre-war hysteria waged by the USA. It can currently export only about 1 million barrel per day in the network of the Oil in Exchange For Food program. This makes up only a half of the quota allowed by the world community to Iraq.
Example of Iraq is really very impressive for all Arab nations: that is what the USA can do with any of the countries rich in oil, if it wishes to. That is why the largest oil exporters, Saudi Arabia and Nigeria, strongly insist that quotas should be raised. Irrespective of its anti-American inclination, the ruling Saudi cluqie understands perfectly well that the quotas are just a mere trifle as compared with possible large-scale opposition. It is well known that all decisions of the oil cartel are adopted unanimously only. The countries no agreeing to a decision, have to stand a long period of persuasion, and OPEC finally succeeds with the persuasion. That is what the OPEC economic committee is currently working upon. What kind of a unanimous decision is the committee to pass soon?
Algerian Minister of Energy and Mines, Chakib Khelil, has also expressed his opinion about the oil production quotas at the session in Vienna. The minister has been presiding over OPEC’s annual conferences for several years, that is why his opinion is of special importance for the cartel. In Khelil’s words, OPEC will have to continuously supply crude oil to the world energy markets. This is to be done to satisfy the needs of oil consuming countries (the USA is mostly meant), and to maintain fair prices.
In other words, if oil prices exceed the price corridor too much and remain on a new level for a rather long period, the key consumer will be dissatisfied and will probably take response measures. For example, the USA can freeze money deposited by OPEC members in the US banks or arrest OPEC-owned property in the USA. Next, CIA agents may quite accidentally discover al-Qaeda training camps on territories of these countries. If it happens, landing of US commandos will turn from a hypothetical possibility into dreadful reality. Only a complete idealist can suppose that the USA and George W. Bush will allow the 1972 world oil crisis to repeat nowadays.
The Russian Duma deputies will soon take up a draft budget for 2003. The deputies have lots of questions to ask concerning the budget. Although the government discussed the draft budget with a four-faction majority of the parliament, more problems are sure to arise. None of the deputies has evidently read the Revenues chapter of the 2003 budget. Russia’s Vice-premier, Minister of Finance, Alexey Kudrin stated that revenues will be calculated on the basis of an average price for crude oil at the rate of $21,5 per barrel. He added at that, the revenues would be re-calculated once again to be on the safe side. But there is no time to re-calculate them already.
What is the government to do if the crude oil price gets lower, which is quite possible after quota raising?