At this time, the eyes of the planet are focused on the near-term outlook, thanks to the volatile state of the international oil market. this is often understandable. However, as I’m sure all folks here today appreciate, this constitutes only a part of the challenge facing us. And so, during this address, I shall be watching both this and future outlooks, which are, of course, linked. My remarks will specialize in oil because this is often OPEC’s principal area of interest.
The current market volatility and high prices are a serious cause for concern among OPEC’s Member Countries. Prices for OPEC’s Reference Basket of seven crudes have recently reached record levels, since this yardstick was introduced in January 1987. They rose above the US $45 a barrel for the primary time earlier this month; this compares with a mean level of $25.8/b from the inception of the OPEC price band from 2000 through 2003. In other words, the typical was on the brink of the center of the $22–28/b price band during that period, and this won wide acceptance among producers and consumers, as being both fair and reasonable.
World Oil and Gas Market Development
We see a mixture of things contributing to the rising price trend this year — albeit. Throughout, the market has remained well-supplied with crude and fundamentals are sound. Higher-than-expected oil demand growth, especially in China and therefore the USA; refining and distribution industry bottlenecks in some major consuming regions, including more stringent product specifications and compounded. By the recent hurricanes within the Americas; and therefore the present geopolitical tensions and concern about the adequacy of spare capacity to satisfy possible supply disruptions.
To help restore order and stability, OPEC raised its production ceiling twice, at Meetings of our Ministerial Conference on 3 June and 15 September. the entire rise for OPEC-10 (that is, OPEC excluding Iraq) was 3.5 million barrels each day, to require the ceiling to 27.0 MB/d. With the ultimate increase of 1.0 MB/d coming into effect on 1 November. These decisions were taken, albeit our assessments had indicated that there was sufficient crude already within the market. Which Member Countries were already pumping out levels of crude well above previous ceilings. It had been believed that, also because of the actual physical fact of agreeing to those big increases in supply, such actions, in themselves, would also send a strong psychological signal that OPEC was able to act so as to assist stabilize prices.