.The death of OPEC
Saudi Arabia walked out on OPEC yesterday, saying it would not honor the cartel's production cut. It was tired of rants from Hugo Chavez of Venezuela and the well-dressed oil minister from Iran.
As the world's largest crude exporter, the kingdom in the desert took its ball and went home.
As the Saudis left the building, the message was shockingly clear. “Saudi Arabia will meet the market’s demand,” a senior OPEC delegate told the New York Times. “We will see what the market requires and we will not leave a customer without oil."
OPEC will still have lavish meetings and a nifty headquarters in Vienna, Austria, but the Saudis have made certain the the organization has lost its teeth. Even though the cartel argued that the sudden drop in crude was due to "oversupply", OPEC's most powerful member knows that the drop may only be temporary. Cold weather later this year could put pressure on prices. So could a decision by Russia that it wants to "punish" the U.S. and European Union for a time. That political battle is only at its beginning.
The downward pressure on oil got a second hand. Brazil has confirmed another huge oil deposit to add to one it discovered off-shore earlier this year. The first field uncovered by Petrobras has the promise of being one of the largest in the world. The breadth of that deposit has now expanded.
OPEC needs the Saudis to have any credibility in terms of pricing, supply, and the ongoing success of its bully pulpit. By failing to keep its most critical member, it forfeits its leverage.
OPEC has made no announcement about any possibility of dissolving, but the process is already over.
MSN
H/T B Will Derd
I see it but I don't believe it.
It dose beg the question, who has been fueling the rise of oil futures on the world markets?
If it wasn't the Saudis, who might not have liked the Shia revival in Iraq, so might have cooperated. But that hasn't changed now. So if it wasn't them, who's left with the economic power to move those markets.
China - might have been cooperating to bring the US down a notch. But after the Russians tried to start WWIII during their Olympics, and the fact that they were able to make a deal with the Iraqis, I think they may have changed their positions.
Who's left, the Russians and the non aligned blockheads.
As the world's largest crude exporter, the kingdom in the desert took its ball and went home.
As the Saudis left the building, the message was shockingly clear. “Saudi Arabia will meet the market’s demand,” a senior OPEC delegate told the New York Times. “We will see what the market requires and we will not leave a customer without oil."
OPEC will still have lavish meetings and a nifty headquarters in Vienna, Austria, but the Saudis have made certain the the organization has lost its teeth. Even though the cartel argued that the sudden drop in crude was due to "oversupply", OPEC's most powerful member knows that the drop may only be temporary. Cold weather later this year could put pressure on prices. So could a decision by Russia that it wants to "punish" the U.S. and European Union for a time. That political battle is only at its beginning.
The downward pressure on oil got a second hand. Brazil has confirmed another huge oil deposit to add to one it discovered off-shore earlier this year. The first field uncovered by Petrobras has the promise of being one of the largest in the world. The breadth of that deposit has now expanded.
OPEC needs the Saudis to have any credibility in terms of pricing, supply, and the ongoing success of its bully pulpit. By failing to keep its most critical member, it forfeits its leverage.
OPEC has made no announcement about any possibility of dissolving, but the process is already over.
MSN
H/T B Will Derd
I see it but I don't believe it.
It dose beg the question, who has been fueling the rise of oil futures on the world markets?
If it wasn't the Saudis, who might not have liked the Shia revival in Iraq, so might have cooperated. But that hasn't changed now. So if it wasn't them, who's left with the economic power to move those markets.
China - might have been cooperating to bring the US down a notch. But after the Russians tried to start WWIII during their Olympics, and the fact that they were able to make a deal with the Iraqis, I think they may have changed their positions.
Who's left, the Russians and the non aligned blockheads.
posted by madtom at 8:23 PM
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