OPEC: New Items on the Agenda
- 30 May 2013
The Organization of Petroleum Exporting Countries (OPEC) is set to hold its first biennial meeting, the 163rd in its history, in Geneva tomorrow. OPEC needs to take note of and adapt to developments that have been shaping global oil markets in recent months so that the organization achieves its objectives related to global energy security, safeguards the interest of member states, preserves its pivotal role in regulating international oil markets and ensures organizational stability.
Global oil and energy markets witnessed a number of developments recently, and in the past few weeks international oil prices faced a lot of volatility. Prices dropped to under $100 a barrel, the lowest-ever for the second time in the past two-and-a-half years. Though prices recovered soon, the OPEC meeting on Friday should not overlook these and several other indicators that influence the present state of the market.
The other point pertains to the setting up of production quotas for OPEC members in light of changes in proven oil reserves of some member states and in oil production levels among others. Some of the countries, which faced internal instability in recent years and increased their production once stability was restored. Thus, countries Iraq have called for increasing their OPEC production quota.
The international oil and energy markets have also been influenced by rising shale oil production in some oil importing countries, especially in the United States, which has brought a substantial change in international oil and energy markets. Rise in production by alternative energy sources also has the potential to reduce demand for imported oil among oil consumeing countries. In fact, oil consuming countries may now turn into the energy exporting rivals of OPEC states in the international markets of the future. This is in addition to a universal expansion into renewable, clean and sustainable sources of energy which is another challenge for OPEC oil.
These developments should be taken up in OPEC’s forthcoming meeting. OPEC ishould also focus in its forthcoming actions on the long-term along with its short-term issues, and deal more seriously with quota sharing concerns among OPEC member states. It should also devote a great deal of attention to the future of oil, in view of the new energy alternatives.