After a year of dizzying gains for energy markets, a rapid fall in oil prices lately is posing a dilemma for OPEC, the oil-producing cartel.
Should OPEC make industrialized countries happy by increasing the oil supply, a move that would probably send prices down further? Or should it keep production at a steady level at a time of economic turbulence, when demand could easily taper off?
As they prepare to meet in Abu Dhabi this week to set output levels for the winter, officials from the Organization of Petroleum Exporting Countries are mindful of the many uncertainties that complicate their task.
Oil prices flirted with $100 a barrel just two weeks ago, but fears of slowing economic growth have since pushed them down by more than 10 percent. Oil futures settled at $88.71 a barrel, down $2.30, Friday, after their steepest weekly decline in more than two years.
This year, as the oil markets have grown more volatile and unpredictable, OPEC officials and energy analysts have noted an increasing disconnection between the price and supply of oil.
They attribute the large price swings more to financial speculation than to market fundamentals, and say the price surge in recent months seemed increasingly at odds with the outlook for the U.S. economy.
At a recent meeting in Riyadh, Saudi Arabia, OPEC leaders cited several reasons for the spike in oil prices. Those included a weak dollar, refining shortfalls in the United States, runaway demand in Asia and speculative investments in commodities.
Abdalla Salem el-Badri, OPEC's secretary-general, said oil producers were not happy with current prices because they might lead to lower demand in the long term.
"We know what high oil prices mean for us," Badri said in a recent interview.
"We really have no interest in high oil prices. And we really have no interest in low oil prices. We want stable prices." *