China and its Role in the Oil Price Rise

There are a number of reasons behind the rapid increase in oil prices. Some people say that the reason is OPEC members’ failure to take the initiative to raise production to achieve the required balance between supply and demand in international markets. In fact, there is no actual shortfall in markets; the current anxiety is due to the fear of a surprise interruption in future supplies, for political, climatic or industrial reasons. The commercial oil reserve, especially in western industrial industries, stands at the average levels it has reached over the last five years. The criticisms of OPEC by the International Energy Agency can be summarized as follows: OPEC states don’t want to increase production enough to enable western industrial states to compensate for what has been drawn down from the commercial reserve in past months.

For its part, OPEC criticizes the role of speculators in oil markets, since their daily investments are estimated at tens of billions of dollars, while the scope of oil transactions that they deal with on a daily basis is dozens of times bigger than OPEC’s level of production, and thus, their big impact and influence on oil markets are not matched by any significant responsibility for developing the industry itself.

Dar Al Hayat