By Isaac Cohen*
With Brent oil prices hovering around $80, the Organization of Petroleum Exporting Countries (OPEC) and Russia, on Sunday in Algiers, decided recent production levels are sufficient to satisfy present demand. Three days before, President Donald Trump Tweeted “The OPEC monopoly must get prices down now!”
However, together with other factors such as Venezuela and Libya, the United States withdrawal, in May, from the nuclear agreement with Iran has contributed to recent oil price increases, due to the consequent imposition of economic sanctions. As a result, by some estimates, oil exports from Iran have already fallen by almost one third. Therefore, several importing countries, such as Greece, Italy and Turkey, are looking for alternative sources of supply, in anticipation of another round of sanctions, expected for next November.
Some relief may come from Russia. According to the Paris based International Energy Agency, in August, Russian oil production increased by 250,000 barrels, to 11.6 million barrels per day.
Additionally, this year, in the United States the production of shale oil by hydraulic fracturing is increasing again, stimulated by the price increase. However, this time the big oil companies, such as Chevron and Exxon Mobil, are expanding the production of shale oil in the United States and abroad, in Canada and Argentina.
The question is if this time the 2011-2014 cycle of boom and bust can be avoided, when prices reached $100 and fell to $30 per barrel.
*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.
