The price of OPEC basket of 12 crudes stood at 105.58 dollars a barrel on Friday, compared with $105.27 the previous day, according to OPEC Secretariat calculations. (View Archives)
The new OPEC Reference Basket of Crudes (ORB) is made up of the following: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).
The Secretary General of OPEC, Dr. Abdalla S. El-Badri stated, “The size, scope, and complexity of the global oil market make it almost unique among physical commodities. Currently more than 90 million barrels of oil are produced and consumed every day.
He said that beyond the scale of this trade, the strategic importance of oil and the crucial role that it plays in the global economy make it a commodity like no other.
The Secretary General stated, “It is the backbone of the global transportation sector, and is used to develop and produce a vast array of everyday products.
He said, “The price of oil is, of course, a central component to all this. In fact, how oil prices evolve in the future matters to every one of us.
The Secretary General stated, “Whether you are a consumer purchasing a petroleum product at the pump, or the refined products for your airlines, ships and trains; or whether you are a producer looking at oil investments and future prices, a stable and fair oil price is vital.
He stated that high oil prices, for example, are bad for consumers today and lead to situations that are bad for producers tomorrow. And low oil prices are bad for producers today and lead to situations that are bad for consumers tomorrow.
The Secretary General stated, “Thus, as I have often said, extreme prices – either too high or too low – are not in the interests of either producers or consumers.
He stated, “I think it is important to initially stress that past experience has shown us that no one country or institution can set or control prices. However, it is crucial we better understand how the market can help realize a stable and fair oil price and eliminate excessive fluctuations. It means looking at the price from both the short- and long-term perspectives.
The Scribe stated, “Clearly there is always much focus on the ups and downs of the price on a daily, weekly and monthly basis. Short-term price fluctuations caused by such issues as geopolitics, supply disruptions, economic developments and weather are natural. They are expected. They are unavoidable. They are absolutely normal.
He stated, “Over the past decade, we have witnessed the increased financialization of oil markets. Oil has increasingly being treated as an individual asset class by financial investors. Speculative funds flowing into – and out of – the commodity futures markets, have exposed the physical oil market to financial market volatility.
The Secretary general stated, “Given the long-term nature of our industry, especially when looking at investments, we need to also pay close attention to future years and what can be done to help provide more stability in the long-term price.”