Posted on 12/04/2015 10:15:44 AM PST by thackney
The Organization of the Petroleum Exporting Countries ended a contentious meeting without any agreement to restrain production, leaving members to continue pumping crude at near-record levels into an already oversupplied market.
The meeting at OPEC headquarters dragged on for more than six hours and was marked by deep fissures within the group, as some members pushed hard for a cut in production that might push oil prices up from their recent $40-$50-a-barrel range, less than half what they were 18 months ago.
But as in two previous meetings, the group couldn’t overcome a fundamental divide: members demanding output cuts, such as Iran and Venezuela, were unwilling or unable to offer production cuts themselves, while those most able to cut, Saudi Arabia and its neighboring Persian Gulf states, refused to do so unless all members participate along with some producers from outside the organization.
The deadlock means OPEC members will likely continue to pump oil in near-record volumes over the next few months, especially since Iran is expected to emerge from international sanctions in that time allowing it to produce and export hundreds of thousands more barrels of oil each day.
The group had been producing more than 31 million barrels a day for much of 2015 and is now adding another 890,000 barrels a day from a new member inducted on Friday, Indonesia.
(Excerpt) Read more at wsj.com ...
Now that the US has broken OPEC’s back, OPEC can’t do anything to save itself.
A nasty cartel which was inching toward irrelevance has picked up a little speed. What’s not to like about that?
????
Our production rate is falling and theirs is rising.
And this means those countries will have considerably less funds to put toward idle hands...
That does not matter—we can reenter the market the moment prices inch up.
Their hold on the world is lost, and with it, their relevance.
As US oil companies continue to go bankrupt, many in oil and related jobs are now out of work and our imports from foreign nations is once again on the rise...
...we will have to disagree.
OPEC is trying to force Frackers out of business ,but if price goes up Frackers are back in business unless Obama has a Plan
They may be pumping more, but they have lost the ability to set the price of oil. OPEC is just responding to market forces now.
We don't agree. They are just choosing to keep the price below most US shale breakeven points of the past few years.
They won't keep it this low forever...
Those shale breakeven points are not under their control. The availiability of alternative producers is setting the price of oil. They are forced to keep the price below that which will cause others to enter the market. This is not a strong position for them.
The Saudis are going for a two-fer, severely damage the US domestic oil industry while bankrupting Russia and forcing them out of the mid-East. They don’t care about the pain begin caused to the other cartel members, it’s all about them after all.
The Saudis believe that with their foreign currency reserves they can outlast Russia, and they are probably right.
I don’t think Putin will allow this fight to remain on Saudi terms. Look for major disruptions to the Saudi distribution network in the near future. He might even get some help from the other members being bankrupted by the Saudis.
We live in interesting times.
I'm not sure about Russia, but Venezuela, Nigeria, Angola and some others will crater. Either the oil price will rise or the government in those countries will be gone long before Saudi runs out of cash. I suspect disruptions in those countries will cause oil price to rise if nothing else changes before.
Even if prices edge back up will they (given the market uncertainty), risk a chancy investment in infrastructure?
Non oil commodity-producing countries have gone through severe price busts without armed revolution. I'm skeptical that oil is somehow special. Libya and Syria are special cases resulting from extensive (and expensive) direct and indirect outside intervention involving air strikes and weaponry. It's questionable, with budgets generally under pressure in the rich countries, that there are spare resources available to stir the pot with the amount of financial resources necessary.
Libya and Syria are also different in the sense of being devout Muslim countries ruled by an atheist and an infidel (Alawite) respectively. The secularism was always only skin-deep, much like Iran under the Shah or Iraq under Saddam.
Non oil commodity-producing countries have gone through severe price busts
Which of those depended 80% or more government income on those commodities?
Just about every African or Latin American country?
I’m not trying to argue, but trying to learn.
Would you give an example that is so depenent?
Take a look at the export profiles of any number of countries in the regions mentioned. You will find that their principal exports are almost always of raw material commodities:
http://atlas.media.mit.edu/en/rankings/country/
Many are also at the margins of existence, where a bad year can mean famine. None of the oil producers fits that profile. (Venezuela is a special case, with its nutty Cuban-style communism without the totalitarianism).
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