Word: opec
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Dates: during 1980-1989
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...past six weeks, three leading gulf producers -- Saudi Arabia, Kuwait and the United Arab Emirates -- have opened their spigots, increasing OPEC's total output nearly 10%, to 21 million bbl. a day. Because worldwide demand for OPEC's crude amounts to only about 19 million bbl., the overflow has created a price-dampening glut. West Texas Intermediate, the benchmark U.S. crude, fell earlier this month to $12.60 per bbl., a drop of nearly $3 from its level in August and more than $7 from a year ago. The price edged upward last week, closing at $14.92 per bbl., reflecting expectations...
...does not, experts like Robert Chandross, chief economist at Lloyds Bank in Manhattan, warn that prices could drop below $10 per bbl. and remain at that level for the next six months. That would mean a repeat by next spring of the oil-market collapse of early 1986, when OPEC overproduction sent prices crashing to less than $10 per bbl. While cheap energy helps most Western economies by lowering inflation, petroleum at prices below $10 or $12 per bbl. is a painful prospect for such indebted oil producers as Algeria and Mexico and the weakened U.S. energy belt...
When Iran and Iraq decided to end their eight-year war, oil producers hoped that a new spirit of unity in OPEC would lead to a boost in crude prices. But the cartel is still fueled more by friction than by fellowship, and oil prices are plunging. Last week the cost of West Texas Intermediate, the benchmark grade of U.S. crude, dropped 4%, to $14.18 per bbl. -- its lowest level in nearly two years. Reason: although OPEC agreed last month to hold daily output to 15 million bbl., some 20 million bbl. are flooding the market each day. Among those...
That could be good news for consumers. If crude-oil output remains high and prices stay down, gasoline and heating oil will eventually cost less. But it will take at least two months for the benefits of OPEC's overproduction to trickle down to the retail level...
...handful of industry analysts maintain that a cease-fire will make little difference in prices. World demand for crude is flat, they argue, and OPEC, which controls only 37% of the market, in contrast to 56% in 1973, may find it difficult to push prices much higher. "If the war ends, the geopolitics of oil are changed greatly," says Daniel Yergin, president of Cambridge Energy Research Associates in Cambridge, Mass. "But the price may not be changed nearly as much." The possibility of peace in the Persian Gulf seems to have left the petroleum community as bewildered as the rest...