OPEC Divided Over Oil's Price Effect on Global Economy
by Armando Duke
Houston, TX - Members of the Organization of Petroleum
Exporting Countries (OPEC) were divided over the effect
of oil prices on the global economy with the host of
the 141st Extraordinary Meeting of OPEC members in
Caracas, Venezuela, Hugo Chavez, reminding members
in his opening address that their countries were
cash-poor before the cartel was created and that
now they were enjoying the benefits of controlling
global prices.
He also reminded OPEC members that when he took
office, the price of crude was $7.60 per barrel and
both Venezuela and OPEC's large producing countries
were facing a deep economic crisis. "Oil was
practically being given away," Chavez said.
"The problem today is that OPEC has become an
audience watching from a distance," said Qatar's
Oil Minister Abdullah al-Attiyah yesterday.
"Now the market is completely controlled by
geopolitics and speculators."
Attiyah reiterated that the deficiency in the global
refining capability is one of the main factors
affecting the inconstancy of the oil prices.
"Right now the market is sufficiently supplied,"
said Edmund Maduabebe Daukoru, President of OPEC
on his arrival in Caracas. Daukoru dismissed the
possibility of registering changes on the production
levels.
"The price of crude oil in the market is due to downstream
factors in the process, such as the refining process,
added to geopolitical tensions and speculation,"
Daukoru said.
The price of OPEC basket of eleven crudes stood at
$64.93 a barrel on Wednesday, compared with $65.41
the previous day, according to OPEC Secretariat
calculations. But in New York, crude oil prices
were higher Thursday after enjoying a $2 per
barrel drop Wednesday as traders grew alarmed
over OPEC's hold over prices.
Light crude for July delivery was up 21 cents per
barrel at $71.50 in late morning trades on the
New York Mercantile Exchange. In London, Brent
crude oil closed down 68 cents per barrel at $70.42.
Unleaded gasoline in New York rose 7 cents per
gallon to $2.16.
OPEC's agreeing to hold production levels eased
traders concerns, though Iran's balking over
Condoleezza Rice's statement in regards to
holding talks with Iran over its nuclear
program caused a knee-jerk reaction in the
U.S. energy market Thursday after Iran
refused to hold talks based on any preconditions.
Rice said that the U.S. was willing to meet
with Iran if it would halt uranium enrichment
first and then only after it proved it was
cooperating.
OPEC ministers say that while geopolitical issues
and higher consumer demands are at fault for high
oil prices, they also point out that China, India
and other countries are vying for the refined
oil being produced and that if nation's want to
curb prices they need to develop refining capacity.
None of the OPEC ministers denied Chavez' comments
about their enjoying the windfall of cash they're
getting for their crude oil but they also wouldn't
accept blame for the cause of higher energy prices
on the global economies.
While oil ministers say refining capacity needs to be
increased, no develop plans were seen being accelerated
by OPEC member countries - except in their interest to
invest in Venezuela - where Chavez has been developing
lateral investment schemes in Bolivia's natural gas
fields where he pledged $1.5 billion to President
Morales.
Both Iran and Qatar have shown an interest to partner
with Venezuela. Qatar's oil minister Al Attiyah
emphasized openly at the Caracas OPEC meeting that
his country is “very much interested” in investing
in Venezuela and will hold talks with his Venezuelan
colleague Rafael Ramírez, Minister of Energy and
Petroleum and President of PDVSA.
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