OPEC talks failed on early June 2011 without agreeing whether to raise oil output .This failure of talks will be a blow to consumer nations who hoped that OPEC will help in controlling oil prices and could also leave oil market to be open to more speculative attack. OPEC should seek possible ways that will ensure oil prices are stable in the international oil markets and should eliminate unnecessary and harmful fluctuations (Max papa.8).This may be through the organization allocating quotas every few months to member countries.
Countries such as Saudi Arabia, Qatar, Kuwait and the United Arab Emirates, said that are ready to increase supply of oil to the market. Saudis Naimi reported that there was a proposal by four Gulf Arab countries that 12-member to increase production output from 1.5 million barrels per day to 30.3 million barrels per day to hit market requirements (Max para. 8).
The decision to increase production was refuted by OPEC’s seven countries that included Angola, Libya Ecuador, Algeria, Venezuela, Iran, and Iraq. The countries proposed that the oil production to be unchanged. The oil minister for Iran said that it was not necessary for them to increase oil production output as it was the opinion of some OPEC members. These countries argue that the Gulf countries are driven by political pressures and not market factors.
Oil production is one of the major factors driving oil prices in the world. Economists argue that increase in oil demand has resulted to escalating oil prices and the situation can be solved through increasing oil supply. The increase in Oil price has resulted to increased price of energy and cost of production causing hike in prices of goods and services. This has led to massive economic losses.
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