Iran And Oil Prices

By Randa Takieddine 

Many international economists are agreed that the price of a barrel of oil rising to more than $100 will have a negative impact on global economic growth, and that the fall in the price of oil in the United States to $94 a barrel at the beginning of the week is something positive for the world, if the price does not drop tremendously. The global economy today is suffering from accumulating problems in Europe, with the crisis in Greece and other European countries, and poor countries such as Bangladesh, or others that suffer considerably from a rise in oil prices to unreasonably high levels.

Official Iranian circles claim that the decision by Saudi Arabia and other Gulf countries in OPEC to raise production came at the request of President Barack Obama, while these countries relied, as in every OPEC conference, on supply and demand figures supplied by the organization's secretariat-general, which relies on the most qualified economists and experts. When Gulf countries opted to raise production, it was in order to avoid any shortfall in petroleum supply, which not only has a negative impact on the world, but also is not in the interest of OPEC states. When prices exceed $100 a barrel, it leads to a reduction in demand for oil over the medium-term.

The rejection by OPEC's triangle of Iran, Venezuela and Algeria of the proposal by the secretariat-general to raise production is not based on any different figures put forward by these countries. Moreover, Iran's production is dropping annually because of sanctions and the policies of the Iranian regime, in which investment is absent. If the anti-production hike triangle of countries could increase production, it would have. Today, Iran and Venezuela want to make up for the drop in their production with high prices.

Meanwhile, the Iranian regime is not using the revenues from its oil to improve the conditions of its people. Instead, it is using them to oppress the population and help its ally Syria carry out a crack-down against its own people. We have heard Syrians say that Syrian intelligence personnel use batons from Iran to beat demonstrators inside mosques; the Iranian regime is intervening forcefully in Lebanon and is taking part in oppression that wastes this country's resources.

The oil policy of Gulf states is a wise and responsible one, because it is based on economic data and constantly monitors global market conditions, which prevents any petroleum shortfall while Libyan oil is absent from the market. However, there are countries in OPEC like Iran, Libya and Venezuela, which are the opposite of responsible.

These countries are erring in this policy of dismantling OPEC, which has experienced a golden age over the past decade because it was able to exclude political problems from its deliberations over various states' interests. If Iranian President Ahmadinejad now decides to use OPEC for his irresponsible political objectives, it is hoped that other countries will not go along with him, because these policies could very much harm an organization that protects the interests of its members.

This commentary was published in al-Hayat on 22/06/2011