The recent OPEC meeting in Geneva was not well received by the market. Although most commentators - including ourselves - expected a roll-over, the decision when it emerged led to a drop of a dollar in the oil price on the Monday after the meeting. It seems that OPEC was perceived as lacking the willpower to put its own house in order by reversing the price rot. Many have come to believe that the price of oil is too low and that OPEC should be doing something about this state of affairs. The general consensus for some time now has been that OPEC should act before it is too late, so when the Organisation does not do much, the chorus of disapproval begins. As it happens, by the end of the week following the Geneva meeting the oil price had risen almost 70 cents from its low point - more in line with our view at the Centre that the roll-over was not that bad an outcome in the circumstances. Despite the price rebound, OPEC's present state is far from satisfactory. The basket price in nominal terms is not that much above the level reached in October 1988, just before OPEC took strong action to tighten quotas in November of that year. In real terms it is just above the average price of oil in 1973. As for OPEC's crude-oil revenues., they dropped by 11% in 1993 and are expected to fall by a further 15% this year on current price and volume projections. These declines in oil revenues are bad enough on their own, but what makes them worse is the dangerously-high level of foreign indebtedness of a number of OPEC countries.

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