Emerging Markets Turmoil Revives a Dreaded Old OPEC Ghost - Bloomberg

Emerging Markets Turmoil Revives a Dreaded Old OPEC Ghost - Bloomberg:

For more than two decades, OPEC has tried to avoid repeating a mistake that cost it dearly. In November 1997, at a meeting in Jakarta, Saudi Arabia convinced fellow oil producers to boost output, ignoring a crisis brewing in emerging markets.

The output increase came at the worst possible time. What in November 1997 looked like a hiccup, by mid-1998 was a full emerging-markets crisis spreading to Russia and Brazil. Global oil demand growth slowed, in part because of an unusually warm winter in the northern hemisphere. Benchmark oil prices fell below $10 a barrel, the lowest since the 1973-74 oil embargo.

For Saudi Arabia, it was a painful blunder, and one that Organization of Petroleum Exporting Countries officials have vowed never to repeat. Now the cartel is facing trouble again in emerging markets. So far, it isn’t remotely similar to the 1997 crisis. And yet, signs abound of slower economic growth from Turkey to China.