The oil price outlook in 1993 and beyond

The current reality appears to be that with spare capacity at a minimum, oil prices are truly market determined. OPEC's actual and perceived influence is much reduced, and in the absence of the cartel, in view of weak demand and fears about potential Iraqi return, the market's tendency is to push prices down. On the basis of ''good, old fashioned extrapolation'', if the current spare capacity of 5 percent is enough to depress prices, then the forecast excess capacity of 19 per cent by 1996 will certainly achieve as much - if not more. (author)