We now come to the events that led to the current problems for OPEC. Remember when looking at this problem that OPEC or any other cartel faces two problems in their attempts to control prices. The first problem is to determine the level of production which meets their collective goals. Simply stated, for OPEC this means maintaining production levels which insure the highest prices possible without encouraging competition outside of OPEC or significant conservation measures on the part of consumers. Crude oil prices rose after 6 months as Saudi Arabia agreed to cut its output by 3.4%
balancing the demand and supply of petrolium.
Oil for November delivery advanced as much as 83cents or 1.4% to $60.59 a barrel.
Prices were dropped by 23% from a record $78.40 on July 14. Every year in the last quarter, OPEC use to increase its production due to the increase in the demand of heating fuel because of winters, but in current year instead of increasing the supply, OPEC has decided to reduce the production.
As per the law of economy when the demand is more and supply is less the price will surly rise. Know the members of OPEC has understood how to maintain the equilibrium between demand and supply of petroleum so that the petroleum prices may stay stable instead of decreasing.
The experts of OPEC are trying that the price of crude petroleum should rise up to $65 a barrel so that the petroleum producing countries may not face economic crisis.
Via: Bloomberg
