14 DAY TRIAL // The current state of the global economy has evolved in such a manner that oil prices, which reached as much as 147 dollars per barrel about three months ago, have now been cut in half by decreased demand. The same level of production implies that more oil is stocked by distributors, instead of being sold. Lower demands also mean lower prices, so producers are at a crossroads.
That's why the 13 nations forming OPEC (Organization of Petroleum Exporting Countries) decided to meet in Vienna last week, to discuss their approach on the problem. This proved to be a bit more difficult than anyone had anticipated, primarily due to the fact that non-OPEC oil producers, such as Russia, don't see eye to eye with the members of the Organization. That is to say, Russia can't be disregarded on the matter, seeing how it produces some 11 percent of the world's oil annually.
The crisis that struck the United States since September also prompted a lot of problems, with the price of the barrel fluctuating like crazy over each stock exchange session. Saudi Arabia, which is the largest oil producer and exporter in the world, expressed its concerns on the matter through the voice of Oil Minister Ali al-Naimi. The price fluctuations affect this nation the most, as just recently president Bush paid a visit to the country, urging authorities to increase oil production, so as to fuel U.S. demands.
However, for the average American oil buyer, prices that would have seemed like moderate some 3 or 4 months back now seem too high, which leaves producing countries in disarray. Further decreasing production and keeping prices high already prompted investors to move their funds to alternative energy. If this trend continues, then oil could be replaced even sooner than anticipated.
On the other hand, if large producers lower the price even further, there will be no profit for them and the barrel price won't even cover production costs. The 13 nations have yet to reach a conclusion and further debate on the matter is still required.