The Organization of Petroleum Exporting Countries is scheduled to meet this week in Vienna. Their task will be to strike a fine balance between setting oil prices just right so that the international economy can continue on its slow and tedious recovery without having to deal with an extra burden of rising oil prices, while at the same time making up for the lack of oil flowing from Libya.
Analysts believe that OPEC will be forced to hold the level of oil production steady, with no serious changes on the horizon. OPEC is made up of 12 member nations, and together they produce roughly 40% of the world’s oil supply. The Wednesday meeting will be held in the midst of growing global fears that a significant increase in the price of crude oil will strike a blow at the hesitant international economic recovery which will lead to a decrease in the demand of oil worldwide.
The International Energy Agency (IEA) has requested that OPEC increase oil output and so avoid another harmful rise in prices, taking into consideration that during the coming summer months Northern Hemisphere oil demand will increase.
Rising Oil Prices Blow to Economy
Brent oil prices have risen a startling 21% so far this year, mostly in response to the widespread protests and violence which have occupied much of the past six months in the Middle East and North African region, with a large contribution from Libya, an OPEC member state.
“I would expect OPEC to leave quotas unchanged, rather than raise them, given the growing evidence that global demand is slowing,” said Capital Economics analyst Julian Jessop. “There is speculation in the market that they will be doing something to acknowledge the supply problems in Libya.
“Regardless of what OPEC happens to do — prices have further to fall,” Jessop added, referring to recent economic data showing that one of the world’s most important oil consumers, the United States is having a rough economic time of it and will most likely reduce consumption rather than pay more for the crude.