Perhaps it is useful, as we embark on the first year of the third millennium, to review the major events of 2000 concerning the oil industry, so that we might reflect on their repercussions and learn some lessons for the future.
The 1998 oil price slump was extremely harmful to the economies of oil producing countries. The revenues of OAPEC countries, for example, declined from $108.9 billion in 1997 to $76.1 billion.
The situation prompted OPEC members Saudi Arabia, Venezuela, and Iran to exert enormous efforts, in collaboration with non-OPEC producers such as Mexico and Norway and with the support of other OPEC members, to stem the slide and rectify prices, which had fallen to less than $10/barrel.
The cooperation between OPEC and non-OPEC producers was fruitful and we hope it may become a positive model for the future.
As oil prices rose in the last two years, OPEC raised its output. In 2000 alone it boosted its production four times in a bid to stem the price rise, because it realized that prices higher than a certain level are as damaging as low prices.
Like other commodities, the oil trade requires two parties: producer and consumer, and a situation where only one party’s interests are served cannot last long.
The events of 2000 show a clear reconciliation between oil producers and consumers. Common experiences should lead to common perceptions. The fluctuation of prices and instability of markets constitute a common challenge.
The consumer nations appreciated OPEC’s decisions to boost output, although they had wanted a bigger increase. Experts in consumer countries began supporting OPEC’s demands that consumer nations help to offset high prices by cutting taxes on oil products.
There are now signs on the oil market horizon that the wave of high prices began to ebb from the beginning of last month.
OPEC therefore reviewed its output increase for the fifth time and thought it best to wait and see how prices pan out before taking a decision this month.
One of the momentous events of 2000 was the historical OPEC summit in Caracas, Venezuela. Its final communiqué highlighted the organization’s determination to defend its members’ interests and to pursue pricing policies that are both profitable and competitive with other energy sources along with production policies that guarantee OPEC a fair share of world supplies.
On the other hand, it undertook to continue supplying the oil market at fair and stable prices and expressed its willingness to continue a global discussion on the environment.
Moreover, it called on the consumer nations to treat oil on an equitable basis by confirming that their oil, environment, tax, and trade policies are fair.
It also undertook to look for effective new channels for dialogue between producers and consumers so as to ensure the stability and transparency of markets and achieve continued growth in the world economy.
These developments were topped by the Seventh International Energy Forum in Riyadh in November 2000, where producers and consumers met and exchanged views.
The producers’ commitment to dialogue was demonstrated by the proposal of His Royal Highness Prince Abdullah bin Abdul-Aziz Al Saud, the Saudi Crown Prince and First Deputy Prime Minister, that the Forum set up a general secretariat in Riyadh so as to provide an institutional framework for international dialogue and constitute a bridge between producers and consumers. All parties at the Forum welcomed the proposal warmly.
The events of 2000 undoubtedly indicate that positive changes may unfold in the near future of the world oil market.
Relations between producers and consumers are passing through a phase of greater understanding of their mutual interests and may herald an era of new harmony in global oil policy.
We at OAPEC look forward to such an era because we recognize that sustained, positive dialogue will eventually lead to mutual understanding and agreement, which will have a positive impact on our economies as well as the world economy.
We reiterate that equitable international economic relations cannot survive in political instability. We hope that the advent of the new US administration will coincide with a new age of political stability in the region based on just and lasting peace.
Stability is the only climate in which the peoples of the region can achieve the development and prosperity to which they aspire.
Source: www.oapecorg.org
© 2001 Mena Report (www.menareport.com)
