Get Ready​ For OPEC Oil Price​ '​Shock​ and Awe'

[Mrs. Sharon B. Hodge]

Get Ready​ For OPEC Oil Price​ '​Shock​ and Awe'


Truckers across US are already walking on thin ropes, the country's 2nd largest natural gas company is teetering towards collapse, foods and goods might not come into US cities if gas price gets out of control, traffic comes to complete halt, petro dollar dies in 2009, people start killing each other at long gas lines - CHAOS


Bloomberg December 02, 2008 - OPEC will cut output this month, secretary general El-Bradi says; Report and analysis by Rebecca Mclaughlin-Duane of Bloomberg News


CBS October 24, 2008 - An emergency meeting was held by OPEC to halt tumbling oil prices, A decision to reduce the supply of oil was agreed upon but, as Sheila MacVicar reports, it may not be adhered by officials


September 10, 2008 - OPEC oil ministers agreed Wednesday to trim overall output by more than 500,000 barrels a day in a compromise meant to avoid new turmoil in crude markets while seeking to bolster falling prices


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OPEC: Get set for oil shock and awe
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Press TV
Sat, 06 Dec 2008

http://www. presstv. ir/detail. aspx?id=77696&sectionid=3510213

OPEC president Chakib Khelil says oil markets should prepare for a "surprise" output cut after the organization's Algeria meeting

"A consensus has formed for a significant reduction of production levels" by the 14-member Organization of Petroleum Exporting Countries, Khelil told AP on Saturday

The OPEC head's warning comes as markets have already been expecting an output reduction; however, Khelil said that it could be "severe," suggesting cuts of as much as 2 million barrels per day

A decision that startles markets would help bolster slumping oil prices, Khelil said. "The best way is to surprise them," he said.
"I hope it (the decision) will"

OPEC members are expected to announce their decision during a summit in Oran, Algeria, on December 17

The decision comes as crude prices slipped to $40.81 a barrel on Friday, the lowest level since May 2005.
This is while only in July, prices peaked at record highs above $140 a barrel

The Saudi Arabian king earlier said that $75 a barrel would be a fair price, an idea that has received the support of other members of the organization

Khelil urged oil producers outside OPEC to help the organization boost prices, especially Russia.
Moscow had earlier said it could sign a cooperation memorandum with OPEC in Oran

"We hope that Russia will apply (quota decisions) ... as if it were an OPEC member,'' he said, adding that the OPEC decision is not intended to "hurt the world economy"

Exporters have been pummeled with low prices, falling demand and declining revenue as a result of the dark outlook of the global economy

Earlier in November, Khelil was quoted by the Algerian newspaper El Khabar as saying that the group's member states had lost about $700 billion due to falling oil prices


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Opec hawks want to cut oil production to keep up price
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The Times UK
October 17, 2008

http://business. timesonline. co. uk/tol/business/industry_sectors/...

Carl Mortished, World Business Editor: Analysis
Opec’s mettle will be tested next week when the cartel assembles in Vienna at a hastily convened meeting to discuss the economic crisis and whether the exporters’ club should take action to arrest the fall in the price of crude oil.
Mounting alarm over the dwindling rent from oil sales prompted Opec yesterday to bring forward an emergency meeting scheduled for mid-November to next Friday

Together the cartel members have lost about a billion dollars of revenue a day since crude price peaked in July. The benchmark US Light crude price fell $5 per barrel on the New York Nymex exchange yesterday to $69.15 (£40.05), less than half the value at oil’s peak, while London’s Brent crude futures contract fell to $65.
70

Evidence of rising oil stocks in America and weakening demand for energy in China’s mills and workshops has speeded up oil’s decline, but there is no agreement within the cartel over price strategy. Opec hawks, such as Iran and Venezuela, want to shore up the price by turning off the taps, but neither country can afford to cut output and forgo revenues.
Both are failing even to produce at their agreed quotas because of weak investment in their oil industries, so the burden of any cut will fall on Kuwait and Saudi Arabia

The Saudis would not like to see the price falling below $60 per barrel, a level at which most economists reckon the kingdom can support its profligate princes, the social security bills and invest in the oil industry. However, the Saudis will be listening to the grinding cogs of the slowing Asian industrial juggernaut with mounting concern.
A deep recession might precipitate an oil price collapse

It is Saudi Aramco that has been responsible for the weakening oil price, pushing more oil on the market since the energy summit in Jedda.
According to Platts, the oil pricing publisher, even as the price tumbles Saudi Aramco has supplied every refiner’s request to lift Saudi crude next month

The wider question is what impact falling crude will have on nonOpec oil output. Russia’s budget depends on a $70 per barrel price, according to Aleksei Kudrin, the Finance Minister.
But Russian oil output is already falling because of weak investment, as is Mexican production

The major Western oil companies can probably stomach prices dipping temporarily to $60 for a few months and still pay their dividends, but a prolonged slump at $50 per barrel would lead to the scrapping of investments followed by another cycle of shortages and soaring prices.