OPEC lost impact on production, price of oil

Oil&Gas Materials 8 May 2015 17:05 (UTC +04:00)
The Organization of the Petroleum Exporting Countries is not able to fulfill its obligations any more.
OPEC lost impact on production, price of oil

Baku, Azerbaijan, May 8

By Elena Kosolapova - Trend:

The Organization of the Petroleum Exporting Countries is not able to fulfill its obligations any more, Behrooz Abdolvand, research director at Berlin Centre for Caspian Region Studies said.

"OPEC has lost much of its importance during the last 30 years," Abdolvand told Trend.

He reminded that the global oil demand was 60 million barrels per day in 1970s and the OPEC produced half of it. "Now the global demand is 92 million barrels per day and the OPEC produces only one third of it."

So, the organization has lost its capability to have an effect on the price and production of oil, according to the expert.

In accordance with its Statute, the mission of OPEC is to coordinate and unify the petroleum policies of its member countries and ensure the stabilization of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry.

Currently, OPEC has 12 member countries: Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela.

The oil prices are not any more determined by the producers and are not dependent on supply and demand, Abdolvand said, adding that the future markets are setting these prices.

Furthermore, he added that the OPEC countries compete with each other on three levels: on the capital market, for shares of the consumer markets and on the level of the production costs.

"Thus, the OPEC members themselves question the right of existence of the organization," said Abdolvand.

Touching upon the situation on the global energy market, he said that the lifting of the sanctions imposed on Iran will have a strong effect on the oil and gas markets, because Iran as a big player on the producers' side will be able to gain new market shares.

Furthermore, Iran is also very attractive for the capital market, the expert added.

Iran and the P5+1 (the US, France, UK, Russia, China plus Germany) should sign a final nuclear agreement till June 30. The sides reached a framework agreement on this issue in early April. Iran hopes that the West sanctions imposed on it will be completely lifted following the signing of the agreement.

Edited by SI


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