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Page added on September 2, 2015
Much ado about … an OPEC editorial
An editorial in OPEC’s latest Bulletin caused much excitement and contributed to a price rally on oil markets on August 31. The oil producer club said it stood “ready to talk to all other producers” but emphasized that this had to be on “a level playing field.”
But there’s nothing new here. OPEC has regularly stated its willingness to talk to other producers and the editorial seems merely to reiterate this.
What appears to have received rather less attention is OPEC’s point, made in the same editorial, that world oil demand is rising — as per the forecasts of OPEC itself, the International Energy Agency and the US Energy Information Administration — and that “if the wide-ranging projections on oil demand are correct, then it is just a case of riding out the storm and waiting for calmer waters to return.”
Indeed, OPEC said, “the one good thing to come out of a period of lower prices is that demand customarily rises as cheaper fuel encourages more usage by the consumers. And the current situation appears to be no exception.”
There has also been much excitement about the possibility of talks at some point between OPEC and Russia, with a meeting set to take place between Nicolas Maduro, President of OPEC member Venezuela, and Russian President Vladimir Putin on September 3 in China.
“Particular attention will be paid to possible joint steps to stabilize prices on the international oil market, particularly in the context of cooperation between Russia and OPEC,” Russian presidential aide Yuri Ushakov said on August 31.
A day later, on September 1, Prime news agency quoted Russian Deputy Prime Minister Adkady Dvorkovich saying Moscow was ready to continue talking to OPEC about oil prices.
Dvorkovich noted that energy minister Alexander Novak had previously participated in OPEC ministerial sessions and that, “if there is an invitation for the next meeting, he will naturally go and take part in those consultations.”
Nothing earth-shattering here, especially when Dvorkovich also said that while a continuation of low prices for a long time might result in a slight reduction in Russian output he did not expect “major cuts.”
Citi analyst Ed Morse, in a note September 1, questioned why any non-OPEC producer would want to commit to a target with OPEC.
“2015 is not like 1998 when Mexican and Russian production were surging and when both countries participated in a supply cut. Russian production is growing this year because of a significantly weaker ruble cost of oil while Mexico is trying to push through energy reform. Neither country is in a position to really commit to a production cut, in our view,” he wrote.
Morse also dismissed any likelihood of the United States, Canada or Brazil willingly cutting production.
And, as Morse pointed out, the main beneficiaries of a cut today would be US producers that can react quickly to price changes.
The proponents of OPEC’s market share policy — Saudi Arabia and its Gulf neighbors — will undoubtedly have been pleased to read the August 31 revised data from the US Energy Information Administration, showing that US producers had cut output in response to the recent oil price decline.
We should not forget that market share isn’t just about OPEC producers competing with non-OPEC producers; there is also a battle for market share going on within OPEC itself.
And Iran, assuming sanctions are lifted, could be pouring a sizeable volume of additional oil onto world markets at some point next year. Tehran has already signaled that sights will be fixed primarily on Asia, where competition is already intense.
So, regardless of talk about consultation and cooperation, in the end it comes down to one question: who is going to cut? Answers on a postcard, please.
16 Comments on "Much ado about … an OPEC editorial"
BobInget on Wed, 2nd Sep 2015 4:59 pm
When will the public wake up to facts;
1) Iran and KSA have been in a state of war for five years. OK, each hires proxies for actual killing and naming. (in Syria and Yemen)
2) Both efforts Yemen and Syria have opened the way ti ISIS and al Qaeda to take over.
3) The time for talk has morphed into a time for action. China doesn’t have unlimited funds.
Makati1 on Wed, 2nd Sep 2015 7:39 pm
More from the oil pimps.
No cuts.
Makati1 on Wed, 2nd Sep 2015 7:52 pm
Highlights of other news:
“The US economy which depends largely on the war industry needs constantly new wars and conflicts. More than 50% of its GDP depends on the military and related industries and services. Obama brags being currently involved in 7 wars around the globe … sanctions cost Russia ‘more than US$ 100 billion … US dictated sanctions on Europe to impose on Russia cost the EU at least € 100 billion … Putin actually said that these sanctions are godsent, as it allows Russia to develop agriculture and industry to eventually become self-sufficient, meaning independent from western trade…. an interesting new theory is emerging, namely that Saudi Arabia is increasingly realizing the decline of the west and is seeking a closer alliance with Russia and China … when gas prices dropped drastically earlier this year, many western shareholders of Russian gas companies panicked and sold off their shares at fire-sale prices – only for the Government of Russia to buy them back- at a net profit of $20 billion within a couple of days, as Spiegel-on-line reported earlier this year…. In 2000, international reserves were to more than 70% held in US dollar denominated securities. This figure has dropped in 2010 to 60% and is today rapidly approaching 50%. When the rate falls below the 50% mark, a flight out of the dollar may be expected…. amazing is that western bankers propagandize a decline of the Chinese economy which by their own account (Bloomberg) is still growing at 7%, which is just what China wants. Knowing the impact the Shanghai stock exchange fluctuations have on the world markets, would not Chinese bankers be able, as their western counterparts often do, to ‘massage’ the Chinese bourse downwards, an indirect ‘sanction’ to the west – costing western investors and banks hundreds of billions of dollars, but changing hardly anything of China’s internal economy….”
http://www.globalresearch.ca/western-sanctions-on-russia-russia-china-cooperation-a-tectonic-shift-of-the-global-economy/5473158
And the beat goes on.
Davy on Wed, 2nd Sep 2015 8:15 pm
This sums up China:
http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2015/09/20150902_china.jpg
Boat on Wed, 2nd Sep 2015 8:17 pm
Lol at sanctions being godsent. Go to RT and listen to the Russians complain about the lack and price of food.
Makati1 on Wed, 2nd Sep 2015 11:10 pm
Boat, don’t the Americans complain a lot about a lot of deficiencies that are only real for a few million? I would note some, but the choices are too many to post here. Take away food stamps and see how much Americans can complain about no food. About 46 million of them. LOL
Wait until food prices in the US revert back to normal (no imports) and all of your income goes for food and shelter and nothing else. Like in the 50s & 60s. The food baskets of America are drying up. The oceans are dying so all the fish, shrimp, crabs, etc. are going to disappear at any price. Ditto for beef as the cost to raise cattle is going to skyrocket. Not to mention the diseases just waiting to take over the nation as it warms up. LOL
The 3rd world is coming to America.
apneaman on Wed, 2nd Sep 2015 11:39 pm
boat, no need to worry about the Russians. Take a good look around your own country. Halfway to 3rd world status.
The surging ranks of America’s ultrapoor
“By one dismal measure, America is joining the likes of Third World countries.
The number of U.S. residents who are struggling to survive on just $2 a day has more than doubled since 1996, placing 1.5 million households and 3 million children in this desperate economic situation. That’s according to “$2.00 a Day: Living on Almost Nothing in America,” a book from publisher Houghton Mifflin Harcourt that will be released on Sept. 1.”
http://www.cbsnews.com/news/the-surging-ranks-of-americas-ultrapoor/
Number of People Living in U.S. on $2 a Day Surges, Book Says
According to a new book, 1.5 million American households — and 3 million children — live in conditions that can be defined as “ultrapoor.”
http://www.moneytalksnews.com/book-says-number-people-living-2-day-has-doubled/
apneaman on Wed, 2nd Sep 2015 11:42 pm
The Oligarch Recovery – Low Income Americans Can’t Afford to Live in Any Metro Area
http://libertyblitzkrieg.com/2015/08/31/the-oligarch-recovery-low-income-americans-cant-afford-to-live-in-any-metro-area/
Makati1 on Thu, 3rd Sep 2015 3:09 am
Last week in 3rd world America:
“Heart age of most Americans outpaces their actual age”
“Why Johnny can’t understand climate: functional illiteracy and the rise of “unpropaganda”
“The Great Unraveling”
“Can 2 Parents, 2 Kids Live on Minimum Wage? Not Even Close: Report”
“South Dakota Makes Teaching Early American History Optional for High School Students”
“Georgia police went to wrong home, shot dog and homeowner, officials say”
“Uh-oh, Canada. China Pales as a Risk to U.S. Growth”
“The Great Unwind, China Begins Dumping Treasuries”
“Trouble South Of The Border: Mexico’s vulnerabilities pose a huge risk to the U.S.”
“ The US Carried Out 674 Military Operations in Africa Last Year. Did You Hear About Any of Them?”
“Rural MT bridge collapse highlights stretched infrastructure funding”
“Sinkholes, another byproduct of Philly’s aging infrastructure”
“The Troubling Decline of Financial Independence in America”
“US Falls Behind Canada, Finland, And Hong Kong In Human Freedom Index”
“Pennsylvania Schools Start New Year Broke With “Minus $1 Billion” In Funding”
“7 million college debtors have yet to make a single student loan payment in last year. The college debt bubble grows.”
“U.S. natural gas production waning”
“Bimbo Bakeries recalls bread sold in 11 states for glass”
“Sewage spill caused by rain flows into Honolulu’s Waikiki Beach”
“CDC to doctors: Keep an eye out for plague”
“13,000 become homeless every month in Los Angeles County, study says”
“Americans’ Economic Outlook Plunges: Rosy scenario gets tangled up in reality.”
“Rutgers University Warns Students – “There is No Such Thing as Free Speech”
“There Aren’t Enough Firefighters to Stop America’s West From Burning”
“Mexican opium production rises to meet heroin demand in US”
http://ricefarmer.blogspot.fr/
Movin’ on down…
Davy on Thu, 3rd Sep 2015 5:17 am
When your economy is crumbling, your leadership is a corrupt oligarchy of old men with dyed hair, your country is a cesspool of pollution what do you do? Well shut the country’s industry down to make the sky less dark, put the bleeding market on holiday so it can be forgotten for a weekend, and bring in the world to watch a gaudy parade of killing machines. China is a grotesque example of the alternative to America. Please anti-Americans give me a better choice than the parade thumping war pig loving countries of China and Russia.
China marks 70th V-Day anniversary with spectacular parade
http://www.rt.com/news/314176-china-military-parade-wwii/
Celebrating the 70th anniversary of Japan’s capitulation in WWII, China has showcased hundreds of its newest military hardware in a remarkable parade which saw some 12,000 troops marching across Tiananmen Square in front of dozens of world leaders.
onlooker on Thu, 3rd Sep 2015 5:38 am
yea, parade your military hardware before it rusts from obsolescence after the Crash.
GregT on Thu, 3rd Sep 2015 12:22 pm
You can be sure that “after the crash”, the military hardware on all sides will be among the very last things to go obsolete.
Moscow and Beijing have both had enough of DC’s warmongering in Eurasia. The ‘New Great Game’ is about to be met with an adversary that is actually capable of fighting back.
Somehow I don’t see the DC oligarchs backing down. They have nothing to lose except for other people’s lives.
GregT on Thu, 3rd Sep 2015 12:59 pm
Sorry,
They have nothing to lose except for other people’s lives, and their one world banking system. The NWO.
onlooker on Thu, 3rd Sep 2015 1:20 pm
Greg, I guess I meant to say more the die-off.
GregT on Thu, 3rd Sep 2015 2:13 pm
I think it’s a safe bet that the psychopaths that make it through the die-off, will continue to do the things that they always have. Whatever military hardware that can be preserved, will be. And IMO, the remaining oil reserves will be exploited by the psychopaths, through whatever means necessary, to maintain control over the masses. However many of them might remain.
GregT on Thu, 3rd Sep 2015 2:27 pm
Of course that’s just my opinion. The remaining could also hold hands while singing Kumbya, but somehow, I don’t think so…..