The Third OPEC Summit Takes Place under Turbulent Economic Conditions
Walid Khadduri Al-Hayat - 11/11/07//
In the coming days, Riyadh will host the Third OPEC Summit, which is convening under three general themes: providing petroleum, promoting prosperity, and protecting the planet. The summit will take place on 17 and 18 November but will be preceded by several activities, including a two-day symposium in which leading energy ministers and international oil experts will take part. The symposium will cover topics such as energy for sustainable development, OPEC's role in securing oil supplies and boosting stability, and the future of oil in the global energy mix.
The program includes a conference that will introduce groups of opinion-makers in member states (Venezuela, Ecuador, Nigeria, Angola, Algeria, Libya, Saudi Arabia, Iraq, Kuwait, Qatar, the UAE and Iran) to various cities in Saudi Arabia, where they will become acquainted the industrial and religious features of the Kingdom. An exhibition of gas and petroleum industrial products will be held in Riyadh, with international oil firms and the related services and engineering companies taking part; there will also be a training seminar for Saudi Arabian economic journalists, to introduce them to the oil and gas industry in the Kingdom and the world. The summit will certainly highlight the importance of Saudi Arabia in the international energy industry because of the country's huge reserve of available crude oil, as well as the strength, expertise and flexibility of its national company Aramco Saudi Arabia, which in recent years has proved its ability to implement agreed-upon petroleum policies with speed and precision, helping the world to avoid many oil shocks that could have occurred due to sudden interruptions in oil supplies from various places in the world.
As is customary in OPEC summits, which are convened irregularly, it is expected that a "declaration of principles" will be issued, defining the organization's stance vis-à-vis the current, fundamental developments in international oil markets. These announcements usually refer to general and global economic and oil topics. The declaration of principles adopted by member states following the first meeting, in Algeria in 1975, included new guidelines for oil policies in light of the new relations between international companies and exporting countries, especially after the important OPEC decisions in the fall of 1973.
These guidelines have indicated that the organization, through consulting and coordinating with the rest of the world, has established a new international economic order, built on the foundations of justice, common understanding, and concern with the prosperity of peoples. The second declaration of principles was issued after the Second OPEC Summit in Caracas in 2000, when OPEC affirmed its adherence to the guiding principles of the organization, in order to achieve a stable international energy order. It is expected that a Riyadh Declaration will be issued at the Third Summit, taking up current oil industry fundamentals and the challenges faced by exporting countries, such as the importance of environmental preservation and securing petroleum supplies on a regular basis.
Since the Riyadh Summit is a meeting of the heads of state, and not prime ministers, of OPEC countries, it is not expected that the gathering will issue detailed decisions about prices, even though they have reached nearly $100 a barrel.
In fact, this issue is left to the market, as it is difficult for OPEC to treat the huge, rapid rise in crude oil prices in light of large, daily fluctuations and unrest experienced by the world economy. This is especially the case after the de-linking of oil market fundamentals and the unjustified rise in the daily price level. Of course, the international economic scene is unstable these days, and this phenomenon covers various domains, such as currencies, precious metals and even food prices.
After the meeting of the conference of OPEC in Vienna in September, the organization issued press statements in which it expressed its unhappiness with the rapid increases in prices and tried to hold the price to around $80 a barrel. However, it became apparent that despite the unofficial increases in production since September (which amounted to more than 1 million barrels a day as an agreed-upon ceiling, according to secondary source statements) and despite the official increase in production, agreed upon for the beginning of November (of around 500,000 million barrels a day), the oil market, like other international markets, refuses to stabilize. Fears of the eruption of military conflict between the west and Iran over the nuclear issue dominate the thinking of observers and prompt speculators to enter the oil, precious metals and currency markets, to take advantage of the profits that may be realized in the event of a military conflict. It's no coincidence that oil prices have risen by around $15 a barrel during the last two weeks, reaching approximately $100, after the Turkish threats to attack northern Iraq.
*Dr Walid Khadduri is an expert in energy affairs
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