OPEC makes investment into its citizens, as crude oil futures soar
The Saudi Arabian government has put plans into motion of investments of more than $34 billion into its poorer citizens and religious groups. A year’s worth supply of free food is now available to Kuwaiti residents. A 34% pay raise has been fielded for civil servants in Algeria. Plans to mount modern, uninterrupted electricity systems on the desert regions of the Emirates are already well underway.
The noble gestures come high on the heels of OPEC members projecting a record high $1 trillion in earnings. The group’s benchmark crude oil futures have passed the $100 per barrel mark and managed to maintain it for the longest periods of time in history. With recent pro-democratic actions taking effect in Egypt, Libya and Tunisia, and going underway in Syria and Yemen, a large number of those earning will be placed into social and public programs of the region.
These actions stray away drastically from the region’s previous indulgent gestures in the face of crude oil investment success. Rather than Abu Dhabi purchasing Manchester United, or Qatar scooping up Porsche stakes, the Gulf nations are putting money back into their people. Of course, in order to fulfill their promises, the group will have to keep their benchmark for U.S. crude oil futures above $80 per barrel.
OPEC’s crude oil commodity has shown a standing of over $100 since late February. The group will require WTI to maintain its crude oil futures at over $80 in order to come through on their altruistic plans.
A number of older social projects will also see progress with the new money. Masdar City, the renewable energy project that Abu Dhabi mapped out in 2008 will receive further funding.
OPEC has opted against increasing crude oil production rates for its third quarter.
As it stands now, over 8% of Saudi Arabia’s crude oil is used in the nation’s own plants as domestic demand continues soaring.
Crude oil futures in New York have decreased a grand total of 25% so far since April, as consumer and investor demand has been waning amid worries of Europe’s debt crisis.
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