When oil prices rose all of a sudden by 30 per cent over the first few days of February — with Brent going past $62 (Dh227.54) a barrel for the first time this year compared to $47 last month — there were no statements being issued by those who believe in conspiracy theories. They did not come out and “acquit” the GCC countries from their earlier accusations that they were behind the oil price collapse.

Those who accused the GCC — the Iranian President Hassan Rohani and Ahmad Khatami, Tehran’s Friday Mass Imam — preferred to keep silent once oil prices started to recover. Which leads us to this question: Have the GCC countries decided to increase oil prices again? Or are there technical and financial factors related to the market, in addition to frantic speculative activity that no one — including members of Opec, which has lost much of its influence and share in the global oil market — can control?

Last month, we identified the main reasons for the price collapse. The report released by the American Energy Agency has more or less reconfirmed what was said earlier. The increase in oil production, which contributed to the collapse of prices, came first from the US, which increased its production in 2014 by 1.6 million barrels a day, followed by Iraq which raised output by 330,000 barrels, and then Canada and Brazil, both with around 250,000 barrels a day.

The 60 per cent of increased production within Opec came from Iraq alone, in addition to non-GCC countries. It must be noted that Iraq is planning to increase production this year according to its oil minister.

Iraq plans to increase production by 17.6 per cent to 4 million barrels a day compared to 3.4 million bpd last year, a move that would put more pressure on prices. Therefore, those who believe in a conspiracy theory have to be more cautious in their next statements.

Oil prices will fluctuate sharply during the year and may fall again, as indicated by Citigroup, which would then be the cue for a spike by the year end. This is because there are other negative and positive factors that will affect prices.

Among the negatives is the increased production from within and beyond Opec and the slowdown in the global economy. Apart from the ongoing crisis in the Eurozone, there is a decline in growth rates in China, India and some of the Latin American countries.

Financial obligations

Meanwhile, the positives lie in the possibility of reduced production of US shale oil, with the latest price collapse led to the closure of several production platforms. Also, many companies declared bankruptcy due to failure to fulfil their financial obligations to banks and lending institutions, which also means suspending production.

Furthermore, geopolitical factors and instability in the Middle East and North Africa along with the above mentioned factors may lead to an increase in prices. The bottom line is that positives and negatives would alternate in influencing prices, and fuelled by ever constant speculators’ intent to achieve quick and sizeable profits.

Indeed, there are multifaceted, interlinked and complex problems that affect oil prices. Tackling or mitigating these problems requires a scientific and objective understanding and far removed from media hype or cheap incitement. The latter course would not contribute to finding practical solutions.

On the contrary, flexibility in cooperation between Opec members on the one hand as well as between Opec and those oil producers outside of the entity is the way that should serve everyone’s interests.

Dr Mohammad Al Asoomi is a UAE economic expert and specialist in economic and social development in the UAE and the GCC countries.