The Organization of Petroleum Exporting Countries (OPEC) is meeting this week. The Financial Times reminds us that oil prices have dropped from $128 a barrel in March to a current price of about $100. The drop is partially due to the financial difficulties in the European Union and the general slowdown in the world’s economy. Normally when the price of oil drops, OPEC calls for a decrease in production so that the price will rise again (supply and demand works!).
Recently OPEC has been producing more oil than its quota in an effort to lessen the impact of the oil sanctions that Europe and America have placed on Iran in an attempt to end Iran’s nuclear program. Saudi Arabia seems to be responsible for the increase–Ali Naimi, Saudi Arabia’s oil minister, told the Financial Times in March that he would like to see lower oil prices “that will not hurt the global economic recovery”.
The Saudis have called for higher oil output levels despite the lower prices. I would love to be a fly on the wall (one who understood whatever language is spoken) at the coming OPEC meeting!