Kemp: News Of OPEC's Demise Has Been Much Exaggerated
John Kemp is a Reuters market analyst. The views expressed are his own
LONDON, Dec 3 (Reuters) - The Organization of the Petroleum Exporting Countries (OPEC) last week made no change to its production target despite a 40 percent slide in oil prices over just five months, causing some commentators to pronounce the cartel irrelevant.
If OPEC cannot act to defend the prices and revenues of its member countries, does the organisation still serve any purpose?
There is an assumption among some commentators that OPEC is only relevant and working if ministers can reach a production agreement in response to shifts in prices, and that strong disagreement is a sign of dysfunction.
But the record suggests that ambitious production-cutting agreements are rare, rather than the norm, and that a robust exchange of views is typical.
There is nothing new about predicting the end of OPEC. Following one particularly acrimonious meeting in 1981, the Kuwaiti oil minister told waiting journalists: "News of OPEC's death has been much exaggerated". A third of a century later, the organisation is still going.
OPEC has always had fierce foes eager to forecast its demise, especially in the United States, where there are still memories about the Arab oil embargo, gasoline lines and soaring fuel prices in the 1970s.
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