Posted on 10/06/2014 11:56:35 AM PDT by thackney
Discord at OPEC is turning into a price war, loosening the cartel’s grip on the oil market and exacerbating a recent steep selloff.
Fissures have widened as Mideast turmoil frays political alliances and producers vie for customers amid a flood of oil from the U.S. and slowing growth in Asia.
“No one is telling anyone what they are up to,” one Gulf oil official said.
Saudi Arabia this week unilaterally lowered the price it charges for crude scheduled for delivery next month—without the typical consultation with other members of the Organization of the Petroleum Exporting Countries, according to OPEC officials. The decision surprised many market watchers, who were expecting the Saudis to cut output to help boost prices, and sent prices hurtling lower....
The Saudi decision followed a similar move by the kingdom and Kuwait to lower prices for delivery this month, without informing other OPEC members, according to OPEC officials, effectively undercutting fellow members.
“If members don’t cooperate, which is likely, everyone is in trouble and prices will drop even further,” said another OPEC official from a Persian Gulf state....
OPEC members are sitting on unused pumping capacity of some 3.8 million barrels a day, equivalent to 4% of global oil supplies, according to the International Energy Agency—spare capacity that could generally be called upon quickly in a pinch.
“If there is a supply crisis, OPEC is the only group that can stand up and respond,” said John Hall, chairman of British consultancy Alfa Energy.....
(Excerpt) Read more at online.wsj.com ...
OPEC is the only one willing to not produce oil to keep prices higher.
“OPEC is the only one willing to not produce oil to keep prices higher.”
May they continue not to produce and become the suicide Islamo Bombers in the Oil producing market and destroy their economies and countries.
Increased supply and lower demand results in lower prices.
Wonder how the glut is going to affect Russia, which is heavily dependent on oil exports.
Ruble Weakens Past 40 Per Dollar on Oil Price Falls and Ukraine Skirmishes
http://www.themoscowtimes.com/business/article/dollar-passes-40-ruble-mark-as-currency-tumble-continues/508444.html
“OPEC is the only one willing to not produce oil to keep prices higher.”
Let’s rephrase it to say that they are the only ones with excess current capacity that could be produced.
The distinction I make is because the USA has taken some very lucrative acreage away from exploration and development, acreage that can permit us to have extra capacity, for the future, of course.
The only reason we choose to withhold it is a political one, like off CA coastline.
That is key. Untapped reserves in the ground are far different than a producing field with wells turned back to 50~80% flow.
“That is key. Untapped reserves in the ground are far different than a producing field with wells turned back to 50~80% flow. “
I agree. My point is that if you look at the words you posted it suggests everyone is producing whatever they want.
It is a timeframe thing only, immediately producible vs within a reasonable timeframe producible.
The USA is purposely not producing what they are capable of. This also props up oil prices over the longer term.
BTW, we do have a lot of SPR that exists in the ground that is readily producible, so, for defensive purposes, this country is also artificially holding prices up (Although I would not suggest we produce the SPR).
if you look at the words you posted
Fair enough. I was trying to speak in terms of OPEC surplus capacity. I understand what you mean.
Producing the SPR for economic reasons would only lead to long term higher prices as we lose the ability to handle disruptions.
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