OPEC's Energy Policy

Oil prices have fluctuated widely over the past few years. Today (4 July 1988) the price of North Sea Brent is less than US $14 per barrel, compared with OPEC's reference price of $18/bbl, which is based on a basket of seven crudes. This means that the price of Brent is nearly $5/bbl lower than the official selling price, if we take Nigerian Bonny Light (one of the seven crudes) as being equivalent to Brent. This is well below the average price of 1987, when OPEC was able to stabilize the market at around the targeted $18/bbl. Nevertheless, it is much higher than the price in 1986, when prices crashed below $10/bbl - and yet less than half the prevailing price in 1985. Thus, the fluctuations are very wide; much wider than anyone in the oil industry expected before 1985.