Policies on oil production of the Organization of Petroleum Exporting Countries

The Organization of Petroleum Exporting Countries is to meet the crisis of falling prices. According to some economists, the organization does not have the necessary means to combat the evolution of the market, which is facing an increasing availability of crude oil, such as to determine the current lower prices. The reaction was expected would have been to reduce output to let the market determine the price of a barrel of oil, but it did not happen. The organization has decided to defend its share of the world market, trying to maintain its dominant position in this manner. This direction was due, in large part, to the decision of Saudi Arabia, who judged essential to its energy policy within the global market, not losing market share to the benefit of other international actors. Of course this decision has been to the detriment of price stability, which have suffered a considerable drop, reaching a significant decrease compared to last year. This is due to the extraction of crude oil which has increased considerably the production. To the Organization of Petroleum Exporting Countries quota official production is 30 million barrels per day, but, for example, in the month of April were produced 31.2 million, which allows it to maintain the share of 40 % of world supply, but the International Energy Agency estimates a surplus supply of 2.5 million barrels. The causes that led to a change in the behavior of the Organization of Petroleum Exporting Countries, which has no more privileged price stability, are to be found in the availability of Russia, which has focused its industrial system mainly around the energy industry, becoming a competitor of the first level of the Arab countries, new extraction techniques, which have allowed the United States to achieve energy independence and that will determine the ability to also become an exporting country. Washington has already started to export oil to South Korea, it is crude oil from Alaska, the only state which is subject to the export to the law passed in 1973, in the middle of the oil crisis and now largely superseded, the that other federal states have requested the repeal, to gain access to the world market. However Saudi Arabia, which is the country's leading organization for political, abandoned unreservedly the policy of price stability in favor of the preservation of the market share, forcing lower gains other oil-exporting countries. This line seems to be shared by the other producing countries of the Gulf, but not from Venezuela and Iran, which have production costs very high, even if Tehran is still paying the sanctions regime to which it is subjected, but that may soon be repealed, allowing the country to enter new quantity of Iranian crude in the market. The political aspect of the issue is still very important and you can frame in different levels of scenarios. Maintaining market share imposes on competitors of the Saudis to lower the price of their crude oil to be competitive, but the quantity, also in the form of reserves, Riyadh, Saudi Arabia allow to easily control their share, without undergoing major kickback. Of course there is still about 60% of the market to be divided among the other manufacturers, but with the US self-sufficient, in reality, the market shrinks considerably. They remain so much room for maneuver to use the price and production of crude oil as a weapon of political pressure. Prevent the sale of oil, for example, to Russia, it means force Moscow to a drastic reduction of its gross domestic product, as well as with Tehran. Then there is the entire Asian region, which includes the super power of China and the emerging countries in this area of ​​the world you play the crucial match of the sale of oil, because the needs of the increasing demand for continuous. In this area the Arabs might act differently keeping the price constant, faced with a growing demand, contrary to what happens in the West where the industrial crisis has decreased the demand for crude oil. A combined action so would enable strategists Arabs to recover liquidity in areas where demand is higher, offsetting losses where you have chosen to support the maintenance of the market share. On everything rests, however, the world economy and the geopolitical situation, at this time, greatly altered.