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More OPEC oil would boost rosy view of economy

Bob Tippee
Editor

When Ali Al-Naimi, Saudi minister of petroleum and mineral resources, expressed confidence about global economic recovery last month, he was neither alone in his optimism nor without doubters.

At the Annual Global Competitiveness Forum in Riyadh, Naimi on Jan. 24 described the world as “clearly” free of the financial and economic crisis. Predicting global economic growth of 4% this year and an increase in oil consumption of 1.5-1.8 million b/d, the Saudi oil minister hinted strongly that members of the Organization of Petroleum Exporting Countries might raise production if necessary to meet demand.

US President Barack Obama also is optimistic. “Two years after the worst recession most of us have known, the stock market has come roaring back,” he said in the State of the Union speech Jan. 25. “Corporate profits are up. The economy is growing again.”

On the same day, the Conference Board reported an increase in its Consumer Confidence Index to 60.6 in January from 53.3 in December. The index uses 1985 as the base year with a value of 100.

Also on the same day, however, the International Monetary Fund sounded cautious.

“Global financial stability is still not assured, and there remain significant policy challenges to be addressed,” IMF warned in its Global Financial Stability Report.

The group’s World Economic Outlook projected expansion in global output of 4.5% in 2011, up about one fourth of a percentage point from its October forecast.

The group said “the most urgent requirements for robust recovery” are remedies for sovereign and financial troubles in the euro area and polices to fix fiscal imbalances and financial systems in advanced economies.

On Jan. 26, the US Federal Reserve confirmed that recovery continues in the US, “though at a rate that has been insufficient to bring about a significant improvement in labor market conditions.”

The Fed extended its emergency program of buying Treasury securities to boost liquidity.

More oil from OPEC would ease oil prices and help everyone share Naimi’s cheery economic view.

(Online Feb. 4, 2011; author’s e-mail: bobt@ogjonline.com)


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