13 December 2012
Opec’s unconventional dilemma with oil prices
Oepc cannot afford to let oil prices sink but it can scarcely afford to let them rise any higher. It is a conundrum for the group, which, for all the cash flowing its way now, finds itself in a tricky spot.
It also means that when Opec meets in Vienna in December it is likely to roll over its existing output ceiling of 30 million barrel a day (b/d). (It may do the same for Abdalla El-Badri’s role as secretary-general, after failure in recent weeks to gain consensus over his replacement.) There will be the usual calls for members to be mindful of the target. But the Gulf countries, led by Saudi Arabia, will keep pumping as much of their oil as they think the market wants. From the group’s perspective, that would be sensible. Any effort to lower the ceiling, or constrain output, would be self-defeating. Oil-demand growth is barely holding up at triple-digit prices: the International Energy Agency
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