The Organization of Petroleum Exporting Countries (OPEC), whose members control over 80% of the world’s oil reserves, fails to exert the same influence on prices as happened in the past, reports MarketWatch, taken by Mediafax.

Last fall, OPEC announced that it will reduce oil production to limit the oversupply powered in part by mining shale exploitation and production in the United States, a growing number of analysts considering that the cartel is “dead” or largely neutralized. OPEC’s production ceiling has been maintained since 2008, at about 30 million barrels per day of oil.

This view is supported also by Francisco Blanch, head of raw materials from Bank of America. Blanch told CNBC television that OPEC has only a little influence on the pricing of crude oil, largely this role returs to the market. “OPEC leaves the market to find its level of balance, instead of controling the prices,” said Blanch.

This policy is certainly not the typical style of operation of OPEC, an organization founded 55 years ago. “The current situation is difficult. I tried, I met and I failed because the countries outside OPEC, insist that the organization must bear responsibility, and we refuse to do this,” declared the Saudi Oil Minister Ali al-Naimi, in March.

Blanch’s comments confirm the view of one of the leading analysts of Goldman Sachs Bank, Jeff Currie, last October, which noted that producers from US shale mining reduced OPEC’s ability to influence prices. Even the former US Federal Reserve chairman Alan Greenspan warned in February that OPEC could no longer ever regain the power to influence oil prices.

On the other hand, Goldman Sachs estimates that oil prices will remain at a low level of around 40 dollars per barrel in the next three months, although there is a growing trend lately. For the first half of 2016, Goldman Sachs analysts expected recovery rates of 65 dollars per barrel.

WTI oil price, reference on the US market, with delivery in May, was in decline Tuesday by 1.55% to $ 51.34 per barrel. Brent, the reference to the London Stock Exchange, with delivery in May, is traded down 0.5% at $ 57.84 a barrel.

OPEC, headquartered in Vienna, was founded in Baghdad in September 1960. The organization’s mandate is to coordinate and unify petroleum policies and ensure market stability, to supply effective, economical and systematic consumers. OPEC has 12 members: Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela.

Source

Mediafax