To End The FReepathon
Posted on 12/07/2015 10:22:51 AM PST by thackney
It used to be said of OPEC that it was like a teabag - it only worked in hot water. If that is so, conditions on world oil markets could hardly be more difficult as prices languish at almost seven-year lows near $40 a barrel.
Yet, rather than closing ranks, OPEC is finding that an intensifying battle for market share, worsened by deep regional differences between Saudi Arabia and Iran, is driving it further apart.
Halfway through last Friday's six-hour meeting, an unexpected dispute erupted over the defining feature of the cartel. In a move sources say was masterminded by Saudi Arabia, ministers finally agreed for the first time in decades to drop any reference to the 13-member group's output ceiling.
The pivot, which surprised not only markets but also some OPEC officials, appeared to be a direct response to Saudi Arabia's arch-rival Iran, which has made clear it intends to make a rapid return to global oil markets next year as nuclear-related sanctions are lifted.
With Tehran looking to pump as much as 1 million barrels per day (bpd) more crude into a market already saturated with excess supply, an increase of about 1 percent in world supply, maintaining or legitimising any pretence of OPEC limits - no matter how notional - was not an option for Riyadh.
"The ceiling issue was very controversial and they could not decide on it," said an OPEC source briefed on the discussion inside the room. "Nobody was happy."
Earlier, another source said there was a "huge disagreement among members, even bigger now, as oversupply is no longer mainly coming from Gulf delegates, but from Iran."
In the near-term, the outcome of Friday's meeting probably makes little difference in global markets. Ever since last year, most members have been pumping flat-out to defend...
(Excerpt) Read more at rigzone.com ...
Crude is under $40 per barrel and we are still paying $1.99/gal here in SW Ohio. Should be about $1.50/gal at those rates.
The oil price crash heavily influenced Venezuela’s elections. Hopefully Venezuela will diversify their economy. One socialist craphole down.
That would be a decades long effort to make much of a difference. I think they will need private investment in oil first, assuming any would take the risk.
Maduro pre-sold a lot of oil still in the ground to the Chinese. The state run oil company is so run down they can’t get the oil out. They won’t be getting much oil money for a while. Any way they go it will take a long time.
Are you talking about mineral rights lease? Just like we do in the US?
“Crude is under $40 per barrel and we are still paying $1.99/gal here in SW Ohio. Should be about $1.50/gal at those rates.”
Take out the taxes being paid at the pump (probably around 40 cents a gallon) and the cost of seasonal fuel blends to see the actual price of the gas.
Oil companies aren’t responsible for costs added through govt taxation and environmental regs.
Even if there are no fuel blend costs, you are probably paying about $1.59 per gallon.
Sorry, I understand what you mean now.
Why China is lending $5 billion to struggling Venezuela
http://www.economist.com/news/business-and-finance/21663169-cash-be-invested-oil-will-deliver-dubious-benefits-both-parties-why-china-loaning-5
Sep 2nd 2015
The cash, to be invested in oil, will deliver dubious benefits to both parties
Because of thin margins on gasoline, the retail price comes down more slowly, thanks to the higher cost of the previous inventory.
That’s it. The
Chinese are first in line. They will get paid before Venezuelans see any new oil money.
good luck,
Too much graft and corruption ingrained.
Iran has been wanting agreements for cooperation with the Saudis for cuts in production and higher prices. Iran has only been exporting about 1.5 million bpd while consuming about 2 million.
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