MORE CRUDE 062618
By Isacc Cohen*
The fourth meeting of the members and non-members of
the Organization of Petroleum Exporting Countries (OPEC),
last week in Vienna, decided to increase production moderately,
by 600,000 barrels a day, to stop oil prices from reaching higher
levels. At almost $70 per barrel, oil prices have reached the highest
level since 2014. Together with a strong dollar, higher oil prices are
causing havoc among net oil importing economies, while they are stimulating
production in the United States.
In Brazil, the army had to intervene to stop striking
truck drivers against fuel price increases of almost 30 percent.
A falling rupiah in Indonesia has made fuel prices an issue in
forthcoming elections and street protests in Sudan have erupted against
high bread prices, caused by higher transportation costs.
Since 2016, members and non-members of OPEC, basically Saudi
Arabia and Russia, decided to cut production by 1.8 million barrels
per day when crude prices reached $27, they have more than doubled to
$65. This increase stimulated production of shale oil in the United States
almost 11 million barrels per day, surpassing Saudi Arabia as the second
biggest producer, after Russia. However, export capacity is limited in the
United States by a lack of new pipelines, while several OPEC members face
difficulties, such as a shutdown of ports in Libya, the threat of new sanctions
against Iran, or the fall in Venezuelan production.
*International analyst and consultant, former Director ECLAC Washington.
Commentator on economic and financial issues for CNN en Español TV and radio,
UNIVISION, TELEMUNDO and other media.