Opinion | Editorials
Opec strives for right balance
It is important that the oil price brings in enough revenue without slowing recovery
- Gulf News
- Published: 00:00 December 8, 2009
- Image Credit: Supplied
Ministers from the Organisation of Petroleum Exporting Countries (Opec) have been able to balance a number of market forces to achieve what some have described as the "perfect" oil price.
The right oil price balances the revenue needs of producing countries and provides them with the funds to make capital investments for future production.
However, the oil price should not be so high as to become a drag on the global economy, which is still struggling with the fallout from the international financial crisis. Slower economic growth will reduce demand for oil, leading to lower prices.
In addition, the price of a barrel of oil has settled down and become more stable in recent months. This is necessary as a volatile oil price makes it difficult to budget and implement the long-term plans essential for sustainable economic development.
Opec has been able to achieve this delicate price balance in part because of better compliance with quotas by member countries. Controlling production levels is one of the most important tools the organisation has to influence the price of oil.
By working together, Opec countries have succeeded in stabilising the oil price to the benefit of its members and the global economy.
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