Question

‏ c. What is the main challenges OPEC has faced in the last 10 years?

‏ and Discuss some of the main effect of the challenges faced by OPEC and its member countries over the referenced time.

Answer 1

Challenges

• The distribution of oil is a significant problem facing OPEC since ten years ago.
• With four-fifths of the world oil reserve, it can be assumed that OPEC should correspond to a similar amount of supply in the market. However, this is different as now OPEC only contributes less than two-fifths of the oil supply, which is a significant problem.
• Due to environmental grounds, pressure has been increasing on OPEC.
• Coping with sudden market change. For example, Covid-19 decreased demand, which increased problems for OPEC.
• For financing problems, a large amount is needed initially.
• Requires market stability, both now and in the future

Effects

• Market speculation is a significant cause of volatility and the rising prices of oil and other commodities.
• Market uncertainty is undermining the effectiveness of oil investment strategies.
• Rising costs and skill shortages.
• The sustainability of biofuels is being reassessed.
• A more intensive technology-based approach is required for addressing environmental concerns, such as CCS and cleaner oil technologies.

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