In recent years, we have witnessed the price of gasoline at the pumps diverging from its direct association to the price of oil. We also have witnessed the same with interest rates. In the US, most mortgages, personal loans, credit cards and consumer credit were tied to the Federal Reserve rates, but no longer. When events like these occur, markets shift and in the long run, it is bad for the consumer, profitable for the corporations in the long run and even more profitable for investors and traders, who are now becoming middle men, in currency and commodities, driving up the prices away from supply and demand and taking huge chunks of profit in the middle.
OPEC has long been able to control the prices of crude oil by controlling production. Once we passed some economic and ideological problems in the birth and growth of OPEC, it has been a controlling and equalizing factor in crude oil. What will happen if they lose their control or their profits.
Supply and demand are no longer the most influential factors that affect prices of oil and other causes have proven much more effective in setting prices of the crude, stated Secretary General of the Organization of Arab Exporting Petroleum Abbas Al-Naqqi.
The other factors that turned much more influential include geopolitical considerations, speculations, status of global crude reserves, rate of the US dollar, conditions at global financial markets, major shares, weather forecast and production and exports, said Al-Naqqi in a statement on Monday.
Al-Naqqi, whose remarks came in a statement, issued on the occasion of the upcoming the Gulf Petroleum Conference and Exhibition (2012), due to be held on April 9, expressed his belief that events that prevailed across the Arab world, over the past months, did not result in significant effects on the prices of oil.
The price of the crude rose from USD 90.00 per barrel in the end of 2010 to some USD 121.00 in end of April 2011, due to noticeable intervention by speculators in the market, unfounded jitters and concern toward events that occurred in the Middle East and Africa that acquire more than 60 percent of the global oil reserves and control more than 40 percent of the global oil trade.
Regarding development and expansion of OAPEC, Al-Naqqi indicated that it has significantly developed since its establishment in Beirut in 1968, when Saudi Arabia, Kuwait and Libya signed an accord to set it up, with headquarters to be based in Kuwait. Algeria, Qatar, the UAE, Bahrain, Syria, Iraq, Egypt and Tunisia had later joined the organization.
Currently, OAPEC comprises 11 member states constitute up to 64 percent of the whole Arab nation. It puts out 27.3 percent of the global production of oil, in addition to 13.8 percent of natural gas and has more than 56 percent of the globe oil reserves.
OAPEC will be devoting some time and efforts to finding ways to force speculators out of the market pricing and bring control of pricing back into basic supply and demand.