A weaker US dollar, strong Asian demand and shrinking non-OPEC production have been slated as reasons why the US$22-28 per barrel nominal pricing band has become irrelevant, combined with the fact the price of crude has not been that low for over a year.
Making price band announcement more significant was Saudi Arabia’s shift in stance towards a price lift. Saudi, OPEC’s largest producer, has been reticent to support sustained higher prices at the risk of alienating its powerful political ally, the United States, which is also its biggest oil market.
OPEC president, Kuwait’s oil minister, Sheikh Ahmad al-Fahad al-Sabah, said the organisation had seen the world economy was able to grow very fast with the high oil prices experienced last year.
“I was at Davos and met with many people and they said that US$50 a barrel or even $60 a barrel will play a small role in the impact of the economy,” he was quoted as saying.
