Opec unlikely to succeed in boosting oil prices

THE upcoming meeting of the Organization of Petroleum Exporting Countries (Opec) in Vienna on Nov 27 has been billed as likely to be one of its toughest yet, and with good reason. Whatever happens at the meeting, there is little prospect that the cartel's fortunes will revive anytime soon. And while that is, of course, not good for Opec, it would be a net positive for the global economy.

Oil prices, currently at less than US$80 per barrel for Brent crude, are at four-year lows. The decline (about 28 per cent so far this year) has both cyclical and structural causes. Cyclically, the slowdown in China's economic growth, the continued weakness in Japan and Europe, and the strengthening of the US dollar have all been negative for oil - as well as other commodities. Structurally, the cartel is up against a combination of the shale revolution in the United States, which has sharply reduced US dependen…