OPEC members have in Vienna decided to leave intact the current production quotas, so as not to ruffle the placid waters of consensus between producers and consumers, which has been existing since after the price collapse of 2008.
The present stable level of production is important for two reasons: One, a reduction could adversely affect the economic growth of members of the cartel; two, an increase in output could lead to price plummeting and the upsetting of the balance on the oil market, the more so that demand in the world is presently stable and a sudden leap is not predicted. The only problem facing members of OPEC at the present time is the activity of the insatiable speculators on the crude oil market, a point highlighted at the Vienna conference of the oil cartel by Harmaniko Pinto, the current Chairman of OPEC and oil ministers from the 12 members of the cartel.
The price range of between 70 dollars and 80 dollars per barrel is accepted by all the players on the oil market, says Gennady Shmal, head of the Russian Union of oil and gas industrialists:
"In recent times, OPEC has fixed reasonably high quotas and for the first time in many years, has been keeping to them, in contrast to the past when quotas were fixed but violated with impunity by members, especially Saudi Arabia, the largest oil producer, said Shmal. Things have now changed and hence the relatively high level of stability on the oil market", said Shmal.
Russia, the second largest oil producer behind OPEC, is keeping a close eye on happenings on the global oil market but pursuing its independent policy. Moscow remains satisfied with its present role of an observer in OPEC, but even under parity cooperation with the oil cartel, Russian leaders scrutinize all the aspects of the cooperation. In contrast to Persian Gulf states, which form the majority of OPEC members, Russia cannot cut back on oil output for any political consideration. If for example, the rigs in Siberia are left idle for long, they may become frozen and become useless
Closer cooperation between Russia and OPEC is considered a threat by Western consumers of Russian oil and rumours are rife in the West about alleged price conspiracy by the two oil producers in order to hike the price of crude oil for Western consumers. The Russian President, Dmitry Medvedev has had to assure Western consumers of Russian oil on many occasions that the country merely coordinates its activity with OPEC and that it is not in collusion with the oil cartel. It seems that Western countries have accepted that the relationship between Russia and OPEC is purely commercial, without diabolical intentions.
Please rate: