OPEC Hits a Slick

OPEC might seem like a tired example of collusion since the alliance has been stable for many years. However, it is certainly produced a gush of news lately as oil prices have slipped by 60% in just a few months. This article offers a nice summary of why each member of the OPEC cartel has failed to bolster the prices (e.g., cut production). This underscores the different strategic objectives that each has an how difficult it may be to maintain cooperation. Some of the reasons reflect divergent goals among partners (e.g., Saudi Arabia, Iran, and Russia). Others reflect internal turmoil (Venezuela). Then there are strategic objectives such as the Saudi’s seeking to thrash the economics of newer, more costly, sources like fracking (which has made the US the top oil producing nation). While this sudden drop in in prices has hurt many oil producing nations (see chart) it has also lubricated many troubled economies in other parts of the world.

Contributed by Russ Coff

1 thought on “OPEC Hits a Slick

  1. It is true that OPEC is now over half a century old but stil equipped with one tool to stabilize the international oil market and that has to change for a more up-to date and modern mechanism to monitor the world oil market.Now coming to to current slime in oil price,it is much too obvious that OPEC can not do everything on its own.There are three major oil producers namely;Saudi Arabia,Russiaand the United States.The three countries produce nearly 30 Million barrels per day of crude.So oil market needs a collective swing producer in order to stabilize oil prices.

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