Word: bbl
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Dates: during 1980-1989
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...World oil supplies are ample, and the price of crude is more likely to sink than spurt. In an effort to raise cash, several members of the Organization of Petroleum Exporting Countries have been overshooting their production quotas and offering customers discounts off the cartel's $34-per-bbl. official price. "OPEC's quota and pricing system may be on the verge of breaking down," said Board Member James McKie, an economics professor and energy expert at the University of Texas. If that happens, McKie added, oil prices could fall to $20 per bbl. or below...
...which to pay their mountainous debts. Among the most surprising victims were a number of oil-exporting nations: Mexico and Nigeria, to name two. Two years ago, the 13-nation OPEC oil cartel gloatingly held the world at ransom for crude oil at prices that eventually exceeded $40 per bbl. But the combination of recession and conservation caused prices to weaken, and by year's end the price of crude had dropped to $30 per bbl. and appeared to be headed even lower. Unbelievable as it would have seemed to most Americans two years earlier, OPEC's survival...
This has become abundantly clear since last March when Saudi Arabia, the group's biggest producer at 7.5 million bbl. per day of output, forced through what amounted to a 9.6% production cut. Its purpose: to take up slack in the market and prevent petroleum prices from slipping below the cartel's official $34-per-bbl. bench-mark level. Once they had agreed to the cuts, Iran, Libya, Venezuela and several other cash-squeezed member states began pumping crude at levels above their ceilings (see chart), as well as discounting the price to their customers. As a result...
...fact, the cautious and conservative-minded Saudis are much more likely to use a carrot at Vienna than a stick. The betting is that they will favor holding the official price at $34 per bbl. As for production, the Saudis might decide to raise the spring quotas by about 10%, which would legitimize the cheating with a return to pre-March levels, while perhaps trimming their own output to keep the glut from growing worse. At the same time, the Riyadh government would stand ready to provide low-interest loans to help tide over financially squeezed cartel members until...
...Saudis, a compromise approach is much more appealing than a high-risk strategy of dramatically slashing prices in order to drive other members into line. Reason: though economists generally agree that a slow and moderate decline in prices to, perhaps, $25 to $28 per bbl. would on balance be a long-term tonic for the wavering world economy, a sudden and wrenching break in prices brought on by runaway discounting could prove perilous for oil exporters and importers alike...