Posted at 10:53 AM , on December 12, 2016
The OPEC meeting on November 30th at Vienna actually turned out to be highly productive for the OPEC. The cartel which accounts for nearly a third of global oil production has decided to cut production of crude oil by nearly 1.2 million barrels per day (bpd). That will effectively take the total OPEC production down to 32.5 million bpd. While this will definitely boost the price of oil in the short run, the question is how significant is this cut in production. Continue reading
Posted at 4:51 PM , on December 22, 2015
That may not be really too far off…
Goldman Sachs has been warning of $20 oil for quite some time and that prophesy seems to be appearing increasingly plausible now. A mix of supply glut, weak demand and changing oil economics, could lead to oil touching $20. Let us understand the key factors that could drive oil to new lows… Continue reading
Posted at 4:43 PM , on December 15, 2015
Could the next year finally belong to the OPEC?
The OPEC meeting last week virtually gave a free hand to the OPEC members to increase their output. Contrary to expectations of an output cut proposal by Saudi Arabia, the OPEC was actually permitted to pump more oil. One argument can be that with just about 33% market share, OPEC has limited influence on oil supply and prices. But more importantly, this also helps the OPEC achieve its long term goal of making oil extraction unviable in most of the developed world. Continue reading
Posted at 5:47 PM , on December 8, 2015
Why the OPEC cannot call for production cuts…
As the OPEC meets for its routine meeting in Vienna, the topic of discussion is something entirely contrary to what has been happening in the last one year. Since November 2014, the OPEC led by Saudi Arabia decided to protect their market share instead of worry about prices. As a result, the price of crude over the last one year has fallen from $110/bbl to $43/bbl. But why talk of cutting OPEC supply now? Continue reading
Posted at 10:25 AM , on November 3, 2015
At a recent meeting of the OPEC, the views were divergent on the subject of whether the OPEC should try to regulate supply. But there was almost a unanimous consensus that a price of $70 / barrel would be ideal for the key OPEC nations across Middle East, Africa and Latin America to breathe easy.
Today the problems are manifesting at various levels. The Latin American nations like Venezuela are almost on the verge of default as oil revenues for their nation’s largest company, PDVSA, have shrunk with oil prices. Brazil has been hit by cheap oil and other commodities. African members like Nigeria and Angola have been vociferous for quite some time about curtailing OPEC supply and have started offering spot pricing to large buyers like India. Middle East, led by Saudi Arabia, seems to be the only segment of the OPEC which wants to continue supplying at lower prices. But that may have to change very soon. Here is why!