OPEC Dictates Higher Prices, Scarcity as Crude Rises

March 26 (Bloomberg) — Saudi Arabia is shipping less oil to customers. OPEC by February reduced daily output by 1 million barrels. Global inventories this year fell the most in a decade.

Credit Ali al-Naimi, oil minister of Saudi Arabia, the world’s largest exporter, who told OPEC members that production cuts would stop a six-month decline in oil. Crude this year rebounded 26 percent from a 20-month low to $62.81 a barrel.


“We are happy with the level of compliance,” Mohamed al- Hamli, president of the Organization of Petroleum Exporting Countries, said in an interview in Bangkok on March 22.

OPEC’s unity may keep oil from dropping below $50 a barrel for years to come, energy experts say. While global demand, supply disruptions in Nigeria and concern about a conflict with Iran contribute to higher energy costs, the 12-nation consortium’s decision to pump less oil underpins crude prices.

“They’ve learned their lessons,” said Daniel Yergin, author of the Pulitzer-winning history of the oil industry, “The Prize: The Epic Quest for Oil, Money & Power.” “They like this band from $50 to $60 and they prefer the upper part of the band rather than the lower part,” he said in a March 22 interview in Washington. “They’ve been pretty effective.”

Bloomberg