Guest views are now limited to 12 pages. If you get an "Error" message, just sign in! If you need to create an account, click here.

Jump to content
  • CRYPTO REWARDS!

    Full endorsement on this opportunity - but it's limited, so get in while you can!

At what point does OPEC crumble???


Recommended Posts

Seems to me that OPEC is merely flexing muscle and showing the world that the world can not compete with OPEC. But in their arrogant charades, at what point does the Middle East as a whole turn their nose up to OPEC? The price of oil was doing just fine till OPEC got involved and took over..... and all of the countries that have supported OPEC are now in economic chaos because of it..... OPEC is at this point a plague to the Middle East as far as I can see. What would happen if OPEC suddenly caved in on itself because of their politics?? Any opinions from the "think tank" on this????

post-16687-0-09541100-1424362486_thumb.j

Link to comment
Share on other sites

Good morning JC,

OPEC in my opinion is nothing more then a giant game of chess and the rules are supply, demand and CONTROL.

here is a article that might shed some light on your thoughts.

http://blogs.platts.com/2014/11/28/opec-meeting-nov14/

Morgan Stanley warned of “unintended consequences.” The bank said the supply/demand balance suggested that an output cut was not needed before March but that the risk of prices moving lower into next year was now significantly elevated.

“Lower prices are bad for the entire oil complex, not just E&Ps. 2015 capital budgets are still in the process of formation, and capex is likely to be cut further from both US and global players. High-cost international projects could face more pressure,” it said. “Low prices today also raise the risk of price shocks in the future. The lower and longer prices fall in the interim, the greater the long-run impact. Losing too much investment or stimulating demand could create a price shock in future years as necessary supply growth cannot return quickly once curtailed.”

Morgan Stanley makes another interesting point: trying to slow non-OPEC production may only make it stronger in the long run. “Necessity is the mother of invention. Lower prices may only force US producers and service companies to innovate even faster, pushing down the cost of production and lifting overall non-OPEC supply potential,” it said.

Norbert Ruecker, head of commodity research at Julius Baer, said markets should eventually rebalance themselves but that the big downside risk now was the uncertainty about how low prices have to drop until growth in shale production stops. But, like Morgan Stanley, Ruecker reckons producers of high-cost oil will find ways of reducing costs. “Today’s pain should make the marginal shale, deepwater or oil sands suppliers fitter, driving further cost reductions, implying lower prices longer term,” he said in a note.

But in the meantime, oil producers “will also get their part of burden sharing through lower oil revenues, which not only in Venezuela’s case, could cause after-quakes on financial markets.”

Neil Atkinson, director of analysis at Lloyd’s List Intelligence, said OPEC appeared to be gambling that lower prices would reduce the rate of non-OPEC prdouction growth, help global economic recovery and stimulate demand for oil.

But the process might prove too slow for those OPEC member countries most exposed to lower oil prices.

“Countries such as Venezuela and Iran pushed hard for OPEC to cut its production ceiling at the Vienna meeting but their pleas went unanswered,” he said. “… if the oil price goes into free-fall, which it did in 2008 when prices collapsed in reaction to an over-supplied market from $146 a barrel in July to only $36 a barrel in December, there will inevitably be an early ministerial meeting to repair the damage caused by today’s gamble”

Link to comment
Share on other sites

Pawns of a much larger game. I'm not a conspiracy guy , but it just all seems a little too intertwined and just so very manipulated. Your question and points are very valid but I'm not sure we can see the inner workings of such a large network. IMO if it crumbled we would just see those guys move to another organization that would be formed right afterwords. They would never just give up that power. Just a simple guys thoughts!

Link to comment
Share on other sites

Just heard this morning they are talking of a North American Union like OPEC. Mexico has lots of oil in the northern part that would be easy to frack like they are doing in South Texas. Mexico just deregulated the oil as well. PEMEX is no longer the only game in town. Mexico should boom in oil now. With massive oil production between the US, Canada and Mexico, OPEC could be hurting if that would happen.

Link to comment
Share on other sites

Just heard this morning they are talking of a North American Union like OPEC. Mexico has lots of oil in the northern part that would be easy to frack like they are doing in South Texas. Mexico just deregulated the oil as well. PEMEX is no longer the only game in town. Mexico should boom in oil now. With massive oil production between the US, Canada and Mexico, OPEC could be hurting if that would happen.

Lots of activity down here 8th, and many upset about the government de regulating but its all about profit and in the oil business the profits are massive.

Link to comment
Share on other sites

OPEC control's enough of the oil market that they will never fall.

You are correct in that they are playing a giant game for giant stacks!

 

Look at how Walmart operates! They come into a new market (area) and have an immediate impact by selling at rock bottom prices! Everyone flocks to them to take advantage. Thus driving all the smaller businesses out-of-business. At that point they raise their prices back to normal.

 

OPEC is doing the exact same thing here! Driving the smaller companies out-of-business & hurting many countries who rely on oil sales. Saudi and a few other countries knew in advance they were going to do this so they maintained a good cash reserve.

 

Take heart - soon enough we will be complaining about the price at the pumps again! :(

Link to comment
Share on other sites

Its that business of "Saudi and a few others knew in advance" as the others in the Middle East was blind sided with the fall in prices as Iraq apparently never saw that one coming. I would have thought there would have been some groups upset by the immediate plunge in prices/income...... Of course by the time OPEC was making plans to fix the glut of oil in the market place, ISIS was on the roads gunning everyone down, chopping off heads, and plotting to take over the world. Plus Iraq was buried deep in doo doo with Maliki's adventures through Iraq's financial landscape, yet we know it will all come around. Hopefully sooner than later. I can deal with higher prices at the pump if I have some extra accounts to help me pay for it!!! :eyebrows:

Link to comment
Share on other sites

Guest
This topic is now closed to further replies.
 Share

  • Recently Browsing   0 members

    • No registered users viewing this page.
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.