By Isaac Cohen*
The fourth meeting of the members and non-members of the Organization of Petroleum Exporting Countries (OPEC), last week in Vienna, decided to increase production moderately, by 600,000 barrels a day, to stop oil prices from reaching higher levels. At almost $70 per barrel, oil prices have reached the highest level since 2014. Together with a strong dollar, higher oil prices are causing havoc among net oil importing economies, while they are stimulating production in the United States.
In Brazil, the army had to intervene to stop striking truck drivers against fuel price increases of almost 30 percent. A falling rupiah in Indonesia has made fuel prices an issue in forthcoming elections and street protests in Sudan have erupted against high bread prices, caused by higher transportation costs.
Since 2016, members and non-members of OPEC, basically Saudi Arabia and Russia, decided to cut production by 1.8 million barrels per day when crude prices reached $27, they have more than doubled to $65. This increase stimulated production of shale oil in the United States to almost 11 million barrels per day, surpassing Saudi Arabia as the second biggest producer, after Russia. However, export capacity is limited in the United States by a lack of new pipelines, while several OPEC members face difficulties, such as a shutdown of ports in Libya, the threat of new sanctions against Iran, or the fall in Venezuelan production.
*International analyst and consultant, former Director ECLAC Washington. Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media.
