Oil Prices and Their Impact on the Global Economy - 2002-10-18

The U.S. Federal Trade Department reported that the increase in oil prices has led to a $38.5 billion deficit in the U.S. government budget, with the average oil price in August reaching $24 per barrel, a record high since December 2000. Meanwhile, Venezuelan President Hugo Chavez stated that his government does not intend to increase production levels, although the proposed budget for next year would require such an increase. President Chavez, during an official visit to Norway, told reporters that he remains committed to the OPEC quota, as increasing production would lead to a decrease in prices. Norwegian oil company officials stated that despite the political and economic unrest in Venezuela, they remain interested in investing in the country's oil sector. Norway is not a member of OPEC but collaborates with the organization in regulating the oil market. Today, oil prices in the London market remained stable, with oil traders attributing this stability to the negotiations in the United Nations Security Council regarding Iraq. Oil market observers noted that the cold winter weather in the Northern Hemisphere and U.S. warnings about potential terrorist attacks also affected the oil market. Today, North Sea Brent crude oil for December delivery was traded at $27 per barrel, which is 9 cents lower than on Thursday.