OPEC raises prices and cuts futures discounts
While promising to address the high cost of oil at its meeting in Vienna on June 15, OPEC has raised the price of its oil to the highest level in a year.
The change in prices was hardly noticed because prices on the New York and London futures markets stayed at almost the same level where they have been trading.
But several of OPEC’s Middle East members, led by Saudi Arabia, increased the price of their oil to US and European refineries and traders by cutting in half the discounts to futures prices they have been giving to those buyers.
This has sent the cost of a barrel of oil from the Middle East from $37 per barrel last October to $50 per barrel currently.
Some OPEC delegates as well as some analysts have justified the cut in the discount by citing rising fuel oil prices as well as rising crude oil inventories in the US, Europe, and Asia, which OPEC sees as a threat to its control of the markets.
The impact to Europe of the cuts in discounts is being exacerbated by the decrease in the value of the euro.