IB Economics IA Commentary. Title of Extract: OPEC will pump more oil, assures Saudi Arabia

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International Baccalaureate Internal Assessment:

Economics Commentary 2

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Date of Commentary: March 20, 2011

Word Count: 748

Pertaining Section of IB Economics Syllabus: 2 (Microeconomics)

Title of Extract: “OPEC will pump more oil, assures Saudi Arabia”

Source: Internet – The Sydney Morning Herald Online


Date of Extract Publication: January 26, 2011

OPEC will pump more oil, assures Saudi Arabia

Richard Spencer
January 26, 2011 - 3:00AM

SAUDI ARABIA has promised that the oil cartel OPEC will boost supplies to meet demand and maintain a healthy level of spare capacity. It was responding to the growing alarm around the world about rising prices for oil.

Ali al-Naimi, the kingdom's oil minister, quoted studies showing world oil demand would grow by up to 1.8 million barrels of oil per day this year, or about 2 per cent.

But he told a conference in Riyadh that the Organisation of Petroleum Exporting Countries would stick to its policy of meeting any increase in demand with an increase in supply.

Non-OPEC countries were expected to continue to raise production, he said.

"The market this year will be in total equilibrium in terms of supply and demand," he said. "I expect price stability to continue at last year's rates.

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''The only thing I am concerned about is the upward or downward pressure of speculators, analysts and future market investors on prices away from natural market fundamentals."

He said spare capacity would remain at 4 million barrels per day, and for OPEC as a whole at 6 million.

The oil price has risen strongly in the past fortnight, closing in on $US100 a barrel as optimism grows that a "double-dip" recession has been averted and worldwide growth is the most likely prospect. But there is concern that if prices rise much above $US100 there will be a risk of the ...

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