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countries unite to fight against price slump


Today, 7th June 2021 marks the day the delegates of the Organisation of the Petroleum Exporting Countries (OPEC) are gathered to speak about the rising issue of the drop in oil prices. It was evident upon the attendance of all the country’s representatives that there were rising tensions between OPEC countries, Iran, the United Arab Emirates, and the all so mighty United States of America. Henry Ford once said, “Coming together is a beginning, staying together is progress, and working together is a success.” Delegates of less economically developed countries (LEDC) like South Sudan and Kuwait urged OPEC countries to work together and to leave no man behind. The delegates of these countries which are highly dependent on oil, came face to face with oil-producing superpowers like China and the United States of America to solve the nerve-wrecking issue, the dropping of oil prices.


Despite the majority of oil production in OPEC countries’ coming to a standstill as a result of the COVID-19 pandemic as well as internal disagreements, the USA shamed OPEC countries, quoting from the committee meeting earlier, “USA’s oil production has sought to high prices as of June 2021”, showing signs to not work closely with OPEC countries, judging by the statement given. Oil production in OPEC countries is highly reliant on geopolitical developments and economic events. For example, the 1973 Arab Oil embargo and the 1980 Iran-Iraq war. (‘How OPEC (and Non-OPEC) Production Affects Oil Prices,2021) Although these events seem to be from a while ago, history always seems to repeat itself as seen in the COVID-19 pandemic. To give readers a better perspective on how detrimental the effect of the drop in oil prices can be, OPEC countries make up to about 40% of the world's crude oil. If we consider the oil exports made by OPEC countries, OPEC’s oil exports represent about 60% of the total amount of petroleum traded in the world.

SAUDI ARABIA

During the conference, today, Saudi Arabia, along with other OPEC countries, mentioned the stagnancy of their oil exports. Upon looking at the feedback from the different country’s representative, Saudi Arabia made a bold statement, saying that the country would consider freezing productions if other major production companies felt the same way. (Oil prices slump on Saudi comments,2016)


UNITED STATES OF AMERICA

Although the USA had claimed earlier today that their economy has improved and was doing “better than pre-COVID levels”, research says otherwise. Earlier today, the USA stated that based on the GDP growth rate calculated as of June 2021, the economic condition of the USA had improved, however, the actual result of the GDP has not yet been officially released. Hence, the USA’s statements can be considered merely a hoax, just to seem more superior than the others. As of the last quarter of 2020, the USA’s GDP reached a record low of -31.4%, (United States GDP Growth Rate, n.d.) thus, “doing better than before” is impossible judging by previous statistics


WHAT TO LOOK FORWARD TO?

Nevertheless, this conference has yet to come to an end. Judging by the direction of the conference as of this afternoon, it seems that it is likely that the OPEC countries will work with major oil producers, Russia and China which has asked for cooperation between the countries to work for the moderation in the supply of oil. Hence, we can look forward to seeing Saudi Arabia and Russia working out their differences from the 2020 Price War to seek a better arrangement for all the countries involved.



REFERENCES

1. Ganti, A. (2021, June 4). How OPEC (and Non-OPEC) Production Affects Oil Prices. Investopedia. https://www.investopedia.com/articles/investing/012216/how-opec-and-nonopec-production-affects-oil-prices.asp.

2. BBC. (2016, April 1). Oil prices slump on Saudi comments. BBC News. https://www.bbc.com/news/business-35941757.

3.United States GDP Growth Rate1947-2021 Data: 2022-2023 Forecast: Calendar. United States GDP Growth Rate | 1947-2021 Data | 2022-2023 Forecast | Calendar. (n.d.). https://tradingeconomics.com/united-states/gdp-growth.

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