OPEC’s Secretary General Abdalla Salem El-Badri has told the BBC that his cartel’s production quote compliance has sunk to just somewhere between 50 – 56%.He finds the development ‘worrying’, which is a bit of an understatement:
“The risk is you see a lot of oil in the market and no one is buying it. Then the price will come down.”
“We need a price where we can invest in new capacity, new supply and also cater for the wealth of our people. Anything below $70 will not permit us to invest.”
Stubbornly trying to defend $70 oil has its consequences, especially during hard economic times when most producer countries want all the income they can get. When compliance hovers around just 50%, one has to imagine that the institution’s continued enforcement credibility is put in question.
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