Word: cartels
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When the OPEC oil cartel was at the height of its power in the 1970s and early 1980s, Persian Gulf banks flourished like palm trees in a desert oasis. Arab governments, rich on oil revenues, were financing projects ranging from airports to universities, and the influx of money caused bank assets to grow 20% a year. Newly prosperous gulf families built banks as status symbols to impress their neighbors. The United Arab Emirates, which has a population of 1.3 million, had 53 banks in operation last year. Said an American economist who has studied the financial development of the Middle...
...most estimates, 80% of all oil produced today sells for as much as $2 per bbl. below OPEC's prices, the highest of which is $28 per bbl. for top-quality light crude. Moreover, the cartel now produces only 43% of the West's oil, vs. 63% in 1979. The rest is pumped by such countries as Mexico, the U.S. and Britain, none of which belongs to OPEC. Three weeks ago Mexico dropped its price to $3 per bbl. below OPEC levels...
...last week's meeting, amid acrimonious charges that some members were cheating the cartel by selling at cut-rate prices, OPEC's 13 members[*] tried desperately to halt the price slide. "Market stability is at the crossroads," admitted Subroto, Indonesia's Oil Minister and the current president of OPEC, at the start of the session. Yet the most that the ministers could agree on was minor adjustments like lowering OPEC's price for the heaviest grade of Saudi crude by a token 50?...
...feeble attempt to boost sagging sales, and no oil expert thought it would work. Said an Indonesian oil trader: "It's a charade. Official prices are there to laugh at." Even the way the decision was made showed the extent of discord inside OPEC. Most cartel decisions have been by consensus, with the member nations at least presenting the appearance of a united front. No such accord could be reached last week. Instead, OPEC was forced to abide by majority rule, with Libya, Iran and Algeria going on record as opposed to the price cut. Nonetheless OPEC tried to look...
...sell oil at market rates, just as others in OPEC already do. They are not likely to do that. The Saudis are trying to keep the organization together against the day, perhaps late in the 1980s, when demand may rise and the world may need more of the cartel's oil than it does now. --By John S. DeMott. Reported by Barry Hillenbrand/Riyadh and Robert Kroon/Geneva