OPEC’s lost decade

Ten years ago the global financial crisis exploded on Wall Street. The most violent and sustained economic eruption in living memory left no industry unharmed, energy included. Oil producers are still grappling with the debris thrown up by its shockwaves. The damage was made worse because few oil policy makers saw it coming. In the summer of 2008, crude was trading at an eye-watering record $147/b. By the first week of September, OPEC was compelled to cut its production to defend prices even though a barrel was still trading above $100. A few days later, Lehman Brothers collapsed and the rest, as they say, is ancient history. “Oil prices, by the middle of the year, soared to heights that were not only unimagined but, as well, unsustainable,” OPEC’s then secretary general Abdalla Salem El-Bari bemoaned in his official review of 2008. “Prices were to later come under unprecedented downward pressure as the financial crisis continued to sweep the world causing a contraction in global oil demand for the first time since 1983.” By the end of that year, the cartel El-Badri headed had been forced into cutting a further 2.2 million b/d from its supplies, the biggest single output reduction… continue reading

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