Home Business OPEC chief suggests economic diversification to CGG, stock market still plunging

OPEC chief suggests economic diversification to CGG, stock market still plunging

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OPEC Chief Abdullah al-Badri is maintaining the position that investment into oil should not cease or decline. In fact, he echoed sentiments suggesting that investors should continue to fund the market despite the steep decline in the last several months – which has now peaked at the lowest crude prices in more than 5 years.

Since June, the decline is quickly approaching the 50% mark – as the crude price of oil hit $57.81 a barrel. The last time the crude price – per barrel – was that low it was May of 2009 and the American market was still in recession. The Organization of Petroleum Exporting Countries is the entity that accounts for and sets large-scale trends for the Arab oil producing nations who are a part of the collective.

OPEC-Chief-Abdullah-al-Badri

At the end of 2013 the price of oil per barrel was $98.17 in the United States. Now, as it crested below $60 – many expected a change of position by the OPEC. “We are not going to change our minds because the prices went to $60 or to $40,” a United Arab Emirates oil minister pointed out at the same conference where al-Badri was speaking. “We’re not targeting a price; the market will stabilize itself,” he went on to add.

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As stock markets in the Persian Gulf stumbled once again and saw massive losses in trading on Sunday, amid fears that the downfall would continue. The Dubai index fell 7.6% on Sunday, and that would translate to a 1,313-point fall if it were compared and translated to the Dow Jones industrial average here in the United States.

The ultimate reason for this is demand that hasn’t met the expectations. Oil is ultimately a supply-and-demand system, and if the demand isn’t what it needs to be to accommodate production, then the price of oil – on a per barrel basis – will reflect that uncertainty or instability.

However, the move of OPEC to not enforce regulation in that region is something that has been measured as a backhanded move. Stewart Glickman of S&P Capital IQ pointed out that “they are going to face more bloodletting with oil prices until other swing producers feel enough pain to stop drilling.”

There has been a lot of chatter around those non-OPEC producers and the impact that they are having on the market as a whole. In the United States, shale oil producers are the driving force behind the United States actually becoming the second largest oil producer in the entire world.

A valuable point to look at when it comes to oil production, and the supply-and-demand nature of the business is that overproduction ultimately kills the industry. A major problem within OPEC, and the rest of the community as a whole is that as OPEC has had a difficult time managing and maintaining discipline when it comes to producing oil – the supply surpasses the demand – and the problems are obvious.

However, at this point it’s worth noting that oil has traditionally been an “up-and-down” industry. Just as there are frequent highs, there are also frequent lows. As al-Badri pointed out that “we’ve been through this several times before.”

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An entrepreneur by birth, blogger by choice, and geek by heart. He founded Sprouts Media, a blogs/websites network company, currently owns over 10 popular web properties, to cater his passion of journalism and entrepreneurship. He is also known as an avid reader, technology enthusiast, explorer, and a broken lover. His passion for knowledge keeps him running all the time. A pure vegetarian, who believes in reincarnation & law of karma and follows the philosophy of “Live and let others Live” because all living beings have equal right on the resources of this planet. He loves to write about Technology and Social Issues on his blogs. He can be reached at nitin [at] sprouts.media.