31/10/2013 00:00
TW
0

by MONITOR
IN a matter of three months, oil prices have fallen by more than half and the oil producing countries inside and outside OPEC are complaining very loudly. Their export earnings have been slashed and their dependency on those earnings has made them vulnerable at a time when the world economy is in a state of flux. Iran wants prices above 90 dollars a barrel to fund its expensive social programmes; Venezuela is said to be desperate for prices to go back up above 100 dollars, such is its reliance on oil revenues for its ambitious national programmes and the subsidies it is handing out to other like-minded Latin American countries.

OPEC's decision at the end of last week to cut global output by 1.5 million barrels a day - about 5 percent of productiobn - did little to stop the fall in oil prices. Brent crude settled at 60 dollars - a far cry from more than double that figure which it touched only four months ago. This kind of volatility helps no-one, producer or consumer, in the end. In the past, the more responsible oil producers have recognised that to throttle international growth by demanding excessive prices eventually rebounds on the oil countries. That common sense approach is needed again.

In the meantime, ordinary consumers of oil for domestic use and of petrol are impatient to know when they will see some reflection of the drop in producers' prices.