Monday, January 02, 2017

There will be two oil prices that will hurt OPEC.

In the closing months of 2016 OPEC held a meeting that set oil prices. Wall Street was happy, but, the meeting may prove to hurt OPEC countries. The non-OPEC oil producers will most likely be selling oil at a far lower price than OPEC because of the glut on the market. The non-OPEC countries can then draw in new customers and increase their market share, if they are able to produce sufficient quantities.

If OPEC continues to hold to the fixed price it will lose customers and force it into a fiscal emergency their as market share shrinks significantly.

The nominated USA Secretary of State will be engaging all the oil sources, including new supplies from Russia. Perhaps. The Arctic Ocean is still the Arctic Ocean. The Russian burgeoning oil supplies have yet to be realized.

When Russia begins it's partnership with Exxon that will increase the global supply and OPEC's oil will be less attractive to consumers. Basically, it will be a price and capacity war between OPEC and non-OPEC countries.

January 2, 2017
By Oil and Company News

...The OPEC-Russia deal’s vulnerabilities (click here) were evident before it was signed. A simple roll call of its parties showed that the agreement lacked four of the world’s 10 leading oil producers: China, Canada, Brazil, and the U.S.

Between them, these four produce one-third of the 10 leading producers’ output. That is besides the deal failing to recruit smaller, but still sizable, oil-producers Norway and Britain. Even more tellingly, when the deal was done, it turned out that OPEC member Indonesia had opted out.

Added up, the deal’s non-signatories represent a critical mass whose increased production as prices rise will compensate for a good portion of the quantities that OPEC and its partners have promised to remove from the markets.

This is besides that experience shows the deal’s signatories are likely to cheat each other.

As data compiled by Goldman Sachs and Commerzbank show, OPEC members have historically violated their own production caps steadily and systematically. Such a scenario is even more realistic now, because there are 11 non-OPEC parties to the deal besides Russia, from Bolivia to Brunei....