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Cartelists’ conundrum: OPEC meets

OPEC, the cartel which controls 40% of world oil output, meets in Vienna today. It faces a dilemma. OPEC’s poorer members, whose oil is generally costly to extract, want to cut output to prop up prices—now at four-year lows. Richer ones, who have lower costs, prefer to keep pumping and maintain their market share. OPEC no longer rules supreme: America now produces more oil than Saudi Arabia, and other non-members such as Russia and Mexico sometimes gain from OPEC’s decisions. A failure to agree on output cuts will send the price tumbling further. But only a deep reduction—of maybe 1.5m barrels a day—will make a difference. Reaching a deal on that would be hard; enforcing smaller quotas harder still. Most likely OPEC will agree to try to enforce existing ceilings. Even that is difficult: its members habitually cheat.

Nov 27th 2014
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