Question 3 (This question has three parts: a, b and c)

You need to read Article 1 "Could an OPEC deal mark the beginning of the end of cheap oil? (pages 8-9 of this exam) to answer the questions below. Part (a) The article starts as follows: "EXACTLY two years after Saudi Arabia coaxed its fellow OPEC members into letting market forces set the oil price, it has performed a nifty half-pirouette. On November 30th it led members of the oil producers' cartel in a pledge to remove 1.2m barrels a day (b/d) from global oil production, if non-OPEC countries such as Russia chip in with a further 600,000 b/d. That would amount to almost 2% of global production, far more than markets expected. It showed that OPEC is not dead yet." Discuss what happens to the global oil market under the two following scenarios: Scenario 1: OPEC members let market forces set the oil price. Scenario 2: OPEC members successfully coordinate their production to remove 1.2m barrels a day. 3 marks Part (b) What is the measure that the article specifically mentions and that OPEC as an organisation needs to adopt to allow it to behave like a cartel? Please be elaborate in your explanations.Part (c) What is specifically the "pragmatism" by Saudi Arabia that is mentioned by the article? Do you think that it is smart, or it is not smart for Saudi Arabia to adopt this strategy of "pragmatism" toward other OPEC members or/and non-OPEC major oil producing countries in the context of global oil market as described in the article