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Sunday, May 28, 2017
Oil prices dropped following news that OPEC and non-OPEC members would extend the current agreement on production cuts for an additional nine months. Khalid al-Falih, Saudi Arabia’s minister of oil explained that the ministers considered extending the cuts for six, nine, or 12 months and concluded that nine months was the most appropriate at this time.
Al-Falih also said that the monitoring committee will continue to meet every two months to assess the situation and will make recommendations to the larger group if members see a need to adjust policy.
Commenting on the OPEC meeting in Vienna David Elmes, Professor of Practice at Warwick Business School, said “Another OPEC meeting and another round of brinkmanship over whether cuts will be sustained and so prices propped up, but this is missing the point about oil’s role in the longer term.” According to Elmes, more focus should be spent on the development of more efficient use of energy, rather than more supplies.
“Prices today and in the near term are absolutely crucial for the economic stability of many oil producing nations, not just OPEC. And we’ll be using some oil and gas for decades into the future. But this shows a longer term trend that we’ll use only the most affordable oil and gas, making investments in other sources that are as affordable, or in using energy more efficiently,” Elmes said.
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