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Posted on 07/06/2026 5:19:33 PM PDT by sopo
The Iran war exposed a long-simmering feud within the world’s most powerful oil cartel, boiling over this spring when it contended with the biggest oil supply shock in history.
Now OPEC faces a fight for its existence.
The Strait of Hormuz has started to reopen, and some OPEC nations are clamoring to ramp up oil production
The ultimate decider will be Saudi Arabia Unlike Iraq and Kuwait, the Saudis don’t need production to ramp up . The country was able to keep its oil business afloat by bypassing the strait with pipelines that shipped oil to a port in Yanbu o
That allowed the Saudis to get its oil out via the Red Sea – not an option for Iraq and Kuwait, whose only seaports lie in the Persian Gulf.
While Iraq’s and Kuwait’s production plummeted , Saudi Arabia’s fell by less than 40%.
If OPEC turns the spigots to max all that oil may have nowhere to go. Demand tumbled during the war as prices surged . Demand hasn’t recovered , it may never return to where it was before the war – particularly in China and Europe, which went on an electrification spree over the spring.
OPEC is fraying at the edges and it has tremendous incentive to keep the gang together. Working together can help it navigate a rapidly changing market
If that happens, the Saudis still have a way to have their cake and eat it, too: Saudi Arabia could agree to raise production caps so high and produce so much oil that it forces oil prices into the $40 range – territory that only the wealthy Saudis could endure.
”
“It would be bitterly ironic if we went from the biggest supply shock ever to a historic supply glut,” he said.
(Excerpt) Read more at lite.cnn.com ...
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From the article:“It would be bitterly ironic if we went from the biggest supply shock ever to a historic supply glut,” he said.
what’s being learned is that there may be plenty of oil, but world refining and distribution of refined products is a lot tighter than anyone imagined.
"Hey, just what you see, pal."
Lots of pieces to the puzzle; I’ve just been reading Thomas Sowell who says cartels fall apart because members cheat on each other. All sorts of facets to the Saudis and Trump’s standoffs with them. Bush, Obama and Biden, especially, so overwhelmed.
This is the longterm goal of this skirmish. Eliminate the ability of Iran to take the world hostage by closing the gulf.
You’d think with such strong and consequential analysis of the OPEC state of affairs that Mr. Goldman would be working for Exxon or some other international energy producer, but he does it for CNN.
And it is not all he does, he also has similar analysis on the stock market, real estate, AI, and geopolitics. https://www.cnn.com/profiles/david-goldman
It’s rather remarkable when you stop and think about it.
I won’t speculate on the outcome of all of it, but there won’t be any domestic exploration at all in the USA below about $80 and it’s at $72 right now.
There certainly is a number too low, but American Light Sweet Crude sells for more than heavy crude and I want to know your source for the $80 cutoff.
And, frankly, it’s not bad long-term. As long as oil is cheap we should have foreign crude in the mix. We can sell when it’s high. That’s market advantage. The onpy time that doesn’t work in our favor is when government gets in the way and prevents development.
I should add, it’s been well below $80 pretty much since Trump got back in office, and was for much of his first term. I don’t remember tbis being an issue then.
It’s all about verb tense. It was ‘say’ - now it’s ‘said’. That was one of Trump’s goals and he’s been saying it since the 80s. But, I guess it’s just Lucky Trump.
While the price has dropped, maybe the federal government can begin replenishing the strategic reserves.
I still remember my trip home from the lake in 1971 when gas stations used to have price wars.
Filled up at a station in a podunk bump-in-the-road town for $0.169 per gallon.
The normal price at the time was between $0.279 abd $0.329.
I was making $1.00 an hour at Micky D’s at the time.
That was a good day.
.
Says CNN. Hey Blitzer you’re still kissing Hillary’s fat and doing the election denial.... Since 16!
I had to excerpt well over half of it, so I hope you did go to the website and even to the “full web article.” Unless I’m mistaken, I didn’t see any references to Trunp. So the conclusion i take is that CNN’s editorial style book is that “ if you don’t have somehing negative to say about Trump, don’t say anything at all.”
An $80 cutoff isn’t precise, but at around that level smaller independent producers tighten their belts, and so do service companies. They will continue to produce existing wells, if they can, to hold leases, but new exploration falls.
Fierce one with prices like that around Wichita KS at that time , they never seemed to reach the northest though. Neither did Mickey D’s for that matter.
Hmmm...
When I returned from Korea in 1952, oil was still about $1 per barrel, and gas was 19 Cents a gallon at the Jenney pump...
Safe to say anything you see from CNN is probably worthless.
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