Oil Importers Relieved as Prices Drop below $64

By: Vasily A. Klimko
Submitted: 2007-01-17 16:25:21
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Traders and importers were relieved last Tuesday when the cost of petroleum had dropped below $64 per barrel. The fall came after the Iranian government had made a softer and more positive response regarding its uranium enrichment project. The recent decision of the OPEC (Organization of Petroleum Exporting Countries) to maintain the current output level also contributed to the decline of oil. Crude oil slid by $1.85 at $63.76 per barrel in the United States, while it decreased by $1.56 to $62.99 in Britain. It must be noted that during the past months, traders and importers had been worried about supplies and had felt the effects of the rising cost of petroleum. However, during the last two months, oil prices have dropped by around 20%.

The continuing fall of prices have also raised questions among the OPEC members whether they should keep the current level of their production or reduce it. Earlier this week, the members of the global oil bloc had gathered in order to discuss current issues concerning the petroleum market. During their meeting, the OPEC members had agreed to maintain their current target output despite the positive developments in the oil market. Needless to say, some members of the organization have been concerned and have considered about reducing their production. While importers continue to benefit from the decline of prices, oil producing and exporting countries are becoming more anxious about the future of their business. In fact, Venezuela has called for the other members of the OPEC to monitor the oil market and to stop the prices of petroleum from dropping further. This was not the first time that the South American nation has urged the other members of the global oil bloc to lower the production.

Oil experts said that the extent of the decrease of prices relied on the decision of the OPEC. The organization, which has not yet disclosed the target oil price, decided last Monday to keep its output at 28 million barrels per day in order to ensure importers of adequate supplies. If supplies from Iraq were included, the group's total output would reach up to 30 million barrels. However, Iraq is currently excluded from the quota considering the oil issues its faces. The Middle East nation has long struggled to restore its oil business amidst terrorist threats and attacks to its facilities in the north. International Energy Agency Chief Claude Mandil commented that OPEC made the right decision considering the act that the prices of petroleum were still high. Meanwhile, US Secretary Condoleezza Rice stated last Monday that the United States might join in the negotiations with the Iranian government if the latter agreed to temporarily halt its nuclear program. During the past months, the nuclear issue has roused fears among traders and importers that Iran might disrupt its exports if the tension intensified. But recently, the Middle East nation has offered a 2 month suspension of its nuclear plans thus easing the global oil market. Traders currently await on the results of the latest of the series of nuclear talks.

Article source: Expert Articles