Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Gold/SPX Ratio and the Gold Stock Case - 18th Jan 21
More Stock Market Speculative Signs, Energy Rebound, Commodities Breakout - 18th Jan 21
Higher Yields Hit Gold Price, But for How Long? - 18th Jan 21
Some Basic Facts About Forex Trading - 18th Jan 21
Custom Build PC 2021 - Ryzen 5950x, RTX 3080, 64gb DDR4 Specs - Scan Computers 3SX Order Day 11 - 17th Jan 21
UK Car MOT Covid-19 Lockdown Extension 2021 - 17th Jan 21
Why Nvidia Is My “Slam Dunk” Stock Investment for the Decade - 16th Jan 21
Three Financial Markets Price Drivers in a Globalized World - 16th Jan 21
Sheffield Turns Coronavirus Tide, Covid-19 Infections Half Rest of England, implies Fast Pandemic Recovery - 16th Jan 21
Covid and Democrat Blue Wave Beats Gold - 15th Jan 21
On Regime Change, Reputations, the Markets, and Gold and Silver - 15th Jan 21
US Coronavirus Pandemic Final Catastrophe 2021 - 15th Jan 21
The World’s Next Great Onshore Oil Discovery Could Be Here - 15th Jan 21
UK Coronavirus Final Pandemic Catastrophe 2021 - 14th Jan 21
Here's Why Blind Contrarianism Investing Failed in 2020 - 14th Jan 21
US Yield Curve Relentlessly Steepens, Whilst Gold Price Builds a Handle - 14th Jan 21
NEW UK MOT Extensions or has my Car Plate Been Cloned? - 14th Jan 21
How to Save Money While Decorating Your First House - 14th Jan 21
Car Number Plate Cloned Detective Work - PY16 JXV - 14th Jan 21
Big Oil Missed This, Now It Could Be Worth Billions - 14th Jan 21
Are you a Forex trader who needs a bank account? We have the solution! - 14th Jan 21
Finetero Review – Accurate and Efficient Stock Trading Services? - 14th Jan 21
Gold Price Big Picture Trend Forecast 2021 - 13th Jan 21
Are Covid Lockdowns Bullish or Bearish for Stocks? FTSE 100 in Focus - 13th Jan 21
CONgress "Insurrection" Is Just the Latest False Flag Event from the Globalists - 13th Jan 21
Reflation Trade Heating Up - 13th Jan 21
The Most Important Oil Find Of The Next Decade Could Be Here - 13th Jan 21
Work From Home £10,000 Office Tour – Workspace + Desk Setup 2021 Top Tips - 12th Jan 21
Collect a Bitcoin Dividend Without Owning the King of Cryptos - 12th Jan 21
The BAN Hotlist trade setups show incredible success at the start of 2021, learn how you can too! - 12th Jan 21
Stocks, Bitcoin, Gold – How Much Are They Worth? - 12th Jan 21
SPX Short-term Top Imminent - 12th Jan 21
Is This The Most Exciting Oil Play Of 2021? - 12th Jan 21
Why 2021 Will Be the Year Self-Driving Cars Go Mainstream - 11th Jan 21
Gold Began 2021 With a Bang, Only to Plunge - 11th Jan 21
How to Test Your GPU Temperatures - Running Too Hot - GTX 1650 - Overclockers UK - 11th Jan 21
Life Lesson - The Early Bird Catches the Worm - 11th Jan 21
Precious Metals rally early in 2021 - 11th Jan 21
The Most Exciting Oil Stock For 2021 - 11th Jan 21
Financial Market Forecasts 2021: Navigation in Uncharted Waters - 10th Jan 21
An Urgent Message to All Conservatives, Right-Wingers and Patriots - 10th Jan 21
Despite Signs to the Contrary, Gold Price at or Near Top - 10th Jan 21 -
Ultimate Guide On The 6 Basic Types Of Index Funds - 10th Jan 21
Getting Vaccinated at TESCO - Covid-19 Vaccinations at UK Supermarket Pharmacies and Chemists - 10th Jan 21
Cheers for the 2021 Stock Market and These "Great Expectations" - 9th Jan 21
How to Plan Your Child With Better Education - 9th Jan 21
How To Find The Best Casino - 9th Jan 21
Gold Is Still a Bargain Buy - 8th Jan 20
Gold Price Set to Soar as Hyperinflation Looms - 8th Jan 21
Have Big Dreams? Here's How to Pay for Them - 8th Jan 21
Will the Fed Support Gold Prices in 2021? - 8th Jan 21
Stocks trading strategies for beginners - 8th Jan 21
Who is Buying and Selling Stocks in 2021 - 8th Jan 21
Clap for NHS Heroes 2021 as Incompetent Government Loses Control of Virus Again! - 8th Jan 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

OPEC Just Confirmed It’s Losing the Oil War

Commodities / Crude Oil Apr 15, 2015 - 11:39 AM GMT

By: Money_Morning

Commodities

Dr. Kent Moors writes: The solid façade of OPEC is crumbling.

The latest indication that all is not well within the ranks of the oil cartel came yesterday, when the organization released its monthly Bulletin.

Inside the magazine, the commentary slammed non-member nations for failing to follow the organization’s lead in “stabilizing” oil prices and having “go it alone” attitudes.


But despite the essay’s reprimanding tone, I found two more hints that OPEC is losing its grip on world energy domination.

Today, the U.S.’s position as a rising energy superpower seems to have the cartel quaking in its boots.

Here’s why I think OPEC is losing the Oil War…

OPEC’s Grasp on Oil Control Loosens…

Although OPEC’s unusual report accused no country by name of blatantly snubbing its policies, it specifically noted that the U.S., along with Canada, (both shale oil sources) had increased production by 6.3 million barrels a day over the past nine years while OPEC had kept its aggregate volume at 30 million.

Traditionally, OPEC has served as the “global balancer” – increasing or cutting oil exports to maintain pricing ranges.

This time, however, it wants those cuts to come from elsewhere.

OPEC still controls 40% of the world’s production. Yet that does not have the impact it had previously.

And with some 86% of the world’s extractable unconventional crude located outside OPEC membership, the problem for the cartel will only become worse as more nations seek to satisfy more demand locally.

Led by Saudi Arabia, last November OPEC announced it had kept its production unchanged, precipitating the final major decline in crude prices. In one day, oil fell by 7% to $69.

True, the decision prompted some cuts from Russia in the face of a declining economy and a faltering currency (both direct results of low oil prices). And the ongoing civil war in Libya has effectively stopped all oil exports from that country.

… And the U.S.’s Energy Dominance Strengthens

But in Saudi Arabia’s eyes, the main culprit remains the U.S., whose expanding shale and tight oil production has shifted the “balancer” position in global oil from OPEC to the Americans.

My international contacts confirm that the U.S. production success has taken the main OPEC powerbrokers – the Saudis, Kuwait, and the United Arab Emirates – by surprise.

More oil is coming quicker than anticipated. Analysts are expecting American oil production to average 9.65 million barrels per day in 2015, beating the previous all-time record of 9.6 million in 1970.

This makes the initiative in yesterday’s Bulletin all the more interesting.

For decades, OPEC has regarded the crude market as essentially its own to control. But the cartel now writes, “There is a stubborn willingness of some non-OPEC producers to adopt a go-it-alone attitude, with scant regard for the consequences,” adding, “In the past, OPEC has often shouldered the burden of ensuring oil market stability alone. In the current situation, which should be of great concern to ALL, is it not time for this burden to be shared?”

It seems even in the oil market that karma can come back to bite you.

Private Enterprise Will Destroy OPEC

The truth is that, unless there is a worldwide agreement to stabilize production, the OPEC approach will fail. Of course, for the “stability” in pricing to take place an absolute decline in extractions must occur in the U.S.

Now, there are some tough choices on the horizon for some American oil companies. But these are resulting from domestic market pricing and high-risk debt concerns, not from what is happening elsewhere in the world.

That’s the most fascinating – and even vindicating – reason for the remarkable expansion of U.S. oil production.

These companies are all examples of private enterprise, a matter always difficult for national oil companies run by their respective states to understand.

And the problems that they face once again demonstrate the superiority of the U.S. economic system in which they conduct their businesses.

These are the problems whose solutions are going to cause certain energy investments to flourish as oil prices go higher – not any move from OPEC.

Open Dissention Within OPEC’s Ranks Weakens the Cartel

There is, however, another subtext in the OPEC commentary worth considering. It is an element I have commented on recently right here in OEI.

Disagreements are arising within OPEC itself over the move to keep production stable and prices low.

As I have mentioned before, OPEC members Venezuela, Iran, and Nigeria desperately need oil prices much higher (well over $100 a barrel) for any chance to save their teetering central budgets.

These cartel countries and others from within OPEC’s ranks have been exporting volumes higher than their monthly quotas from the cartel justify. These are the countries OPEC is condemning for having “go it alone” attitudes.

And some of these impoverished OPEC countries are starting to openly show their dissent.

Last Wednesday, Samir Kamal, Libya’s OPEC governor and director of the planning division at the country’s oil ministry, stated that members should change course and cut oil supply by 800,000 barrels per day or more to prevent an expected return of Iranian exports from weighing on prices.

There are two interesting aspects to this statement.

First, just about every expert inside and outside OPEC recognizes that it will take quite some time before Iranian increased exports hit the market, assuming a nuclear accord is even reached. Given the state of the Iranian oil sector, some estimates are now putting the time needed at several years, not months. 

Kemal might have been using Iran as an example. But his comments obviously address the economic pain felt by OPEC members due to the current policy of stabilizing prices.

Second, his comments were not submitted in a memo to OPEC or contributed to the Bulletin magazine. His opinions were contained in an unsolicited email to Reuters, an international news agency.

Saudi Arabia has some juggling to do. Not only is opposition to its OPEC policies becoming more pronounced within the cartel…

It is now going public.

Source :http://oilandenergyinvestor.com/2015/04/opec-just-confirmed-its-losing-the-oil-war/

Money Morning/The Money Map Report

©2015 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules