barrister
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Big News! Saudi's quit OPEC?
Just scanned this but even the title is intriguing. WOW.
http://blogs.moneycentral.msn.com/topstocks/archive/2008/09/11/the-death-of-opec.aspx
The death of OPEC
Posted Sep 11 2008, 07:01 AM
by Douglas McIntyre
Saudi Arabia walked out on OPEC yesterday. It said it would not honor the cartel's production cut. It was tired of rants from Hugo Chavez of Venezuela and the well-dressed oil minister from Iran.
As the world's largest crude exporter, the kingdom in the desert took its ball and went home.
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Tuitio Fidei et Obsequium Pauperum
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9/11/2008, 1:54 pm
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barrister
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Re: Big News! Saudi's quit OPEC?
As the Saudis left the building the message was shockingly clear. According to The New York Times, “Saudi Arabia will meet the market’s demand,” a senior OPEC delegate said. “We will see what the market requires and we will not leave a customer without oil."
OPEC will still have lavish meetings and a nifty headquarters in Vienna, Austria, but the Saudis have made certain the the organization has lost its teeth. Even though the cartel argued that the sudden drop in crude as due to "over-supply", OPEC's most powerful member knows that the drop may only be temporary. Cold weather later this year could put pressure on prices. So could a decision by Russia that it wants to "punish" the US and EU for a time. That political battle is only at its beginning.
The downward pressure on oil got a second hand. Brazil has confirmed another huge oil deposit to add to one it discovered off-shore earlier this year. The first field uncovered by Petrobras has the promise of being one of the largest in the world. That breadth of that deposit has now expanded.
OPEC needs that Saudis to have any credibility in terms of pricing, supply, and the ongoing success of its bully pulpit. By failing to keep its most critical member it forfeits its leverage.
OPEC has made no announcement to the effect that it is dissolving, but the process is already over
Top Stocks blogger Douglas A. McIntyre is an editor at 24/7 Wall St.
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Tuitio Fidei et Obsequium Pauperum
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9/11/2008, 1:55 pm
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Corona69x
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Re: Big News! Saudi's quit OPEC?
Corrupt sons of *****es...
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9/11/2008, 1:57 pm
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poebassman
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Re: Big News! Saudi's quit OPEC?
My first impression is to get up and dance a jig.... now... what does this really mean?
Will there be a different cartel? Will the price of oil drop, skyrocket or stay the same?
stability is good sometimes... what would this instability do for us?
What are your thoughts Barrister?
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9/11/2008, 1:57 pm
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steveatl
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Interesting...
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One House One Spouse Obama 08!!!
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9/11/2008, 1:58 pm
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barrister
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Re: Big News! Saudi's quit OPEC?
quote:
poebassman wrote:
My first impression is to get up and dance a jig.... now... what does this really mean?
Will there be a different cartel? Will the price of oil drop, skyrocket or stay the same?
stability is good sometimes... what would this instability do for us?
What are your thoughts Barrister?
I agree poe. Kneejerk reaction is FANTASTIC!!!!!
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Tuitio Fidei et Obsequium Pauperum
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9/11/2008, 1:58 pm
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barrister
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Re: Big News! Saudi's quit OPEC?
quote:
barrister wrote:
quote:
poebassman wrote:
My first impression is to get up and dance a jig.... now... what does this really mean?
Will there be a different cartel? Will the price of oil drop, skyrocket or stay the same?
stability is good sometimes... what would this instability do for us?
What are your thoughts Barrister?
I agree poe. Kneejerk reaction is FANTASTIC!!!!!
Let me think this through a bit more cooley.
I don't think any cartel can be succesful without the largest producer as a member. Initially, I think the price of oil will drop, maybe quite a lot. From a strictly economic perspective I think this is very good for the West. HOWEVER
From a global political perspective, this could be disasterous. As we all know, the various Arab OPEC members don't much like each other. The various Muslim sects have been at each others throats for centuries. The Sunni/****e issue has been evident in Iran/Iraq. Both the Sunnis and ****es consider the Wahabis in Saudi Arabia and UAE to be heretics and have gone to battle over it in the past. One of the only things keeping them from ripping each other apart is oil and the need to cooperate to keep their respective economies running. Now that certain non-Arab members are becoming more vocal (Hugo) I think the old line Saudis are getting fed up and figure they don't need OPEC anymore. This could lead to a total regional meltdown, which would really be bad for the West in the long run.
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9/11/2008, 2:04 pm
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steveatl
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My first impression was that this was going to cause more instability over there.
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One House One Spouse Obama 08!!!
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9/11/2008, 2:05 pm
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thequestions
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i agree with the kneejerk comment. on the surface this seems like a good thing, but better the devil you know rather than some new cartel that may emerge.
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9/11/2008, 2:06 pm
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joydakiss
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I wonder what reason the Saudis had to not honor OPEC's production cut. Does it have anything to do with the notion that "over-supply" is directly attributable to the drop in prices, and that cutting supply would thus increase prices back up to where prices are unbearable again?
I doubt OPEC will let Saudi officially defect without some serious persuasion.
And I agree that the tremendous instability this would be disaster for the US and for Israel...probably most of the world.
Maybe those guys should think about getting Brazil to the table, if the deposit they discovered is one of the largest in the world.
Although I thought Brazil was totally fossil-fuel independent? 
--- We do not see things as they are; we see things as we are. ~ Talmud
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9/11/2008, 2:19 pm
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