The president of the OPEC stated earlier this week that oil prices might keep on climbing steadily and reach 200 USD per barrel before year end.
This might seem far-fetched, but since the beginning of the year, oil prices rose by nearly 20 percent and there is no sign that the situation will reverse.
Meanwhile, the people of the OPEC believes that offer equals demand and that they don’t need to increase production.
According to the Financial Times :
Opec’s president on Monday warned oil prices could hit $200 a barrel and there would be little the cartel could do to help.
The comments made by Chakib Khelil, Algeria’s energy minister, came as oil prices hit a historic peak close to $120 a barrel, putting further pressure on global economies.
His remarks suggest Algeria wants Opec to continue to resist calls by US and European leaders for the cartel to pump more oil to help ease prices. But Mr Khelil blamed record oil prices on the weak dollar and global political insecurity.
He told El Moudjahid, Algeria’s government newspaper: “I don’t think that an increase in production would help lower prices, because there is a balance between supply and demand and the stocks of gasoline in the United States have recorded a surplus and are at their highest level for five years.”
He added: “The prices are high due to the recession in the United States and the economic crisis, which has touched several countries, a situation that has an effect on the value of the dollar. Each time the dollar falls 1 per cent, the price of the barrel rises by $4 and of course vice versa.”
Some US senators have pinned the blame for high oil prices directly on Opec and Saudi Arabia, its largest and most powerful member.
In a letter to President George W. Bush last week, they said Riyadh had cut its oil production by about 2m barrels a day over the past three years, even though oil prices had continued to rise.
Well, I don’t know if these senators are right or wrong, but basically, if we were the OPEC, would we increase the production to make oil cheaper ? I mean, who would decrease their income willingly ?
$200 a barrel, that makes more than one dollar per liter of unrefined oil. ( a barrel contains 159 liters ). With that, the economic downturn would accentuate dramatically.
This is a huge signal for political deciders worldwide to promote all alternatives such as thermal renewable energies and energy efficiency.
And you, what do you think about the situation at hand ?