2002 - OPEC

market following the slide in the final months of 2001, and brought prices back within the price band,
underlining the need for continued co-operation as a long-term necessity, rather than a short-term
solution. The OPEC Reference Basket price started the year at a low of $18.33 per barrel for January
and ended in December at a high of $28.39/b. The Basket recorded a yearly average of $24.36/b,
just a few cents shy of the middle of the band range.
OPEC stuck to its output quotas throughout the year in order to maintain market stability and in light
of the expected weakness in demand. The oil market tightened in response to lower supply, and fear
of a war in Iraq created uncertainty in the market. Although prices started the year well below the price
band’s lower limit of $22/b, by March they had successfully been brought back into the band’s range.
Subsequently, prices in the second quarter (and indeed for the rest of the year) were much healthier
than in the two previous quarters, with the average Basket price lying in the range of $23–25/b in
April–June. However, with a possible US-led invasion in Iraq looming, the market remained volatile
and the so-called war premium began to push prices higher.
Developments in the third quarter of the year were mainly influenced by the summer driving season
in the northern hemisphere and uncertainty about the near-term outlook for the world economy. The
true extent of the global economic recovery, particularly in the leading industrialized nations, remained
unclear.
Moderate global economic growth rates were expected before year-end, with normal seasonal growth in
demand being expected for the fourth quarter. OPEC, therefore, decided that its production agreement
would remain unchanged. The market was well supplied with oil and in November there was a general
softening of the price structure, by several dollars a barrel. However, various factors including continuing
fears of a possible supply disruption from Iraq resulted in a sharp increase in prices on world oil markets
in December. Overall, however, the annual average price for the whole of 2002 remained comfortably
inside the price band of $22–28/b.
Continued oil market stability requires the development of a long-lasting and mutually beneficial
partnership between OPEC and non-OPEC producers. OPEC, therefore, will continue to make every effort
to further these promising partnerships in order to enhance mutual understanding and co-operative
dialogue amongst energy-producing and energy-consuming countries alike.
HE Dr Alvaro Silva-Calderón
Secretary General
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