OPEC sends global economy into knock-out: western analysts
Azerbaijan, Baku, July 6/ Trend , A.Badalova/
High oil prices are unacceptable under the current economic crisis and can cause a serious threat for its recovery. "Higher oil prices could certainly hinder economic growth and recovery," Analyst on the Energy Policy of the U.S. Cascad Policy Institute Todd Wynn wrote to Trend in an email.
Last week, OPEC President, Energy Minister of Angola, Botelho de Vasconcelos said the current oil prices on world markets are acceptable both for consumers and producers. He said the world economy is recovering and the current prices are "balanced". The cartel aims to reach crude oil prices to $75 per barrel by late 2009. The OPEC president believes this price will not damage the fragile world economy.
However, Wynn is not in agreement with OPEC cartel decisions, but he understands the rationale of profit seekers.
"Acceptable or not, profit seekers will seek for maximum revenue," Wynn said.
The American analyst thinks if OPEC is making well educated decisions and forecasts on profit potential, they have considered the oil price effect on the current world financial crisis and still have decided that it makes sense to increase oil prices.
American Scientist and President of the Pioneer Astronautics Robert Zubrin also believes that high oil prices should not be acceptable under the current economic situation.
"They [high prices] do major damage to the world economy," Zubrin wrote to Trend in an email. He believes it is only being achieved by OPEC through a willful conspiracy to constrict production in order to force the rest of humanity to pay them excessive tribute.
"Such action is particularly evil at a time when hundreds of millions of people worldwide have been thrown out of work by the economic slump," Zubrin said. "Instead of helping, OPEC is doing everything it can to make things worse."
In June, OPEC's oil production increased to 25.86 million barrels per day which is by 1.015 million barrels per day more than the set price at 24.845 barrels per day.
Wynn predicts a slight increase over the summer months and a leveling off and possibly a decline after August/September.
Oil prices will wander about the $60-$70 level for a while, but then shoot well above $100 when the economy starts to recover, Zubrin believes.
He said this will send the world right back into recession again.
"It is like we are a boxer who has been knocked down to the mat, and they are standing over us. Every time we try to get up, they will slam us right back down again. We need to get out from under these people," Zubrin said.
Oil prices again dropped due to pessimism regarding the world economy. At the end of auctions on Friday on the London Stock Exchange, the August contract for the North Sea Brent crude oil fell by $1.04 and was $65.61 per barrel. In electronic auctions for WTI, prices also fell below $66 a barrel.
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