The Organization of the Petroleum Exporting Countries, or OPEC, has decided not to reduce production at a key meeting in Vienna. The decision comes in spite of a 30 percent drop in the price of a barrel of oil since June because of weak demand from Europe and China.
The 12-country cartel, which accounts for a third of the world’s oil output, was divided on the move. Venezuela and Iran urged reduced production, while Saudi Arabia and other Gulf States wanted no change. CCTV America’s Nathan King reported this story on why oil producing countries don’t want to tighten supply.
OPEC keeps oil production unchangedThe Organization of the Petroleum Exporting Countries, or OPEC, has decided not to reduce production at a key meeting in Vienna. The decision comes in spite of a 30-percent drop in the price of a barrel of oil since June – because of weak demand from Europe and China. CCTV America's Nathan King reports.
OPEC’s decision on oil production disappoints Venezuela
OPEC’s decision dealt a blow to Venezuela. The country was hoping to shore up oil prices and raise badly-needed revenue for its struggling economy. CCTV America’s Martin Markovits reported this story.
OPEC's decision on oil production disappoints VenezuelaOPEC's decision not to cut production dealt a blow to Venezuela. The country was hoping to shore up oil prices and raise badly-needed revenue for its struggling economy. CCTV America's Martin Markovits reported this story.
Venezuelan Oil Minister Rafael Ramirez’s campaign to convince OPEC to boost plummeting oil prices ended in disappointment. The cartel’s decisions not to cut production, the price of oil slumped below $72 a barrel lower than they’ve been in more than four years.
“For four and a half years we had a very decent price, now the price has declined but that does not mean that we should really rush and do something. We have to wait and see how the market will settle. I said many times to you that we don’t want to panic, I mean it,” said Abdullah Al-Badri, Secretary General of OPEC.
Cartel members may not be panicked, but with the price of crude tumbling more than 35 percent since June there is concern. For some OPEC states like Venezuela will feel more pain than others.
Venezuela has been hit hard by skyrocketing inflation and dwindling international reserves. The country depends on oil exports to finance spending on social welfare programs for the poor.
If prices sink any lower, it could force Venezuela to change its economic policies. There have been calls for the government to devalue the currency and raise the price of gas at the pumps-already the cheapest in the world.
Cuts in social welfare programs are likely to be a last resort. With President Nicolas Maduro’s popularity a the polls at an all-time low and congressional elections next year, some economists say the Venezuelan president will not want to anger his main political base-the poor
“The problem is that these kind of measures generates a political cost and at this moment the popularity of President Maduro is very low which limits him into making these kinds of decisions. It is a political cost because to devalue the currency will generate more inflation and putt less money in the people’s pockets,” said economist Luis Oliveros.
By some calculations, Venezuela needs the price of oil to be over $117 a barrel to break even. With the price of oil more than $45 below its breakeven point, President Maduro is facing some hard decisions on how to keep his country’s economy afloat.
Cornelia Meyer talked about what OPEC means for the world
For more on OPEC, CCTV America spoke with Cornelia Meyer, an independent energy expert, about how OPEC came to its decision and what it means for the rest of the world.