OPEC slows down global economic growth

MOSCOW. (RIA Novosti economic commentator Oleg Mityaev) – On September 11, the Conference of the Organization of the Petroleum Exporting Countries (OPEC) met in Vienna, Austria, to discuss oil-production quotas.

Most OPEC countries said the cartel should not produce more than 25.8 million barrels of oil per day, citing slackened projections for global and U.S. economic growth.
Although OPEC said a year ago that a barrel of oil should cost $60, it is quite happy with the inflated profits from current prices in excess of $70. However, oil prices reached $78 prior to the meeting in Vienna and are likely to skyrocket further unless OPEC increases production.

Market watchers said the price of a barrel of oil could reach over $80 if the cartel does not take action. On August 1, the price of West Texas Intermediate (WTI) oil hit an all-time high of $78.77 per barrel.

Given the current U.S. mortgage crisis and declining nationwide employment, exorbitant hydrocarbon prices could trigger a recession in the U.S. and throughout the industrial world. In this case, the demand will drop and oil prices will go down, while reduced prices would deprive oil exporters of their super-profits.

Russia, the second largest oil exporter after Saudi Arabia, shares OPEC’s economic interests. Although Russia, which is not a member of the cartel, has reached the limit of its capacity, it continues to benefit from OPEC efforts to reduce production.

RIA Novosti