Harry
09-11-2008, 08:26 PM
http://blogs.moneycentral.msn.com/topstocks/archive/2008/09/11/the-death-of-opec.aspx
Saudi Arabia walked out on OPEC yesterday, saying 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.
As the Saudis left the building, the message was shockingly clear. “Saudi Arabia will meet the market’s demand,” a senior OPEC delegate told the New York Times. “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 was due to "oversupply", 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 U.S. and European Union 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. The breadth of that deposit has now expanded.
OPEC needs the 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 about any possibility of dissolving, but the process is already over.
http://news.bbc.co.uk/2/hi/business/7423008.stm
Indonesia has said it will quit the oil producers' body Opec as it is no longer a net exporter of the commodity.
Energy minister Purnomo Yusgiantoro confirmed the move, which had been anticipated for some time.
Opec's sole member in South East Asia, Indonesia became a net importer of oil in recent times after production fell and it struggled to find new reserves.
Soaring oil prices have pushed up inflation in Indonesia and a recent cut to fuel subsidies prompted protests.
Production stagnates
Indonesia will leave the 13-member organisation when its membership expires later this year.
Opec has yet to comment on the development.
The BBC's Lucy Williamson in Jakarta says the decision is not unexpected, since Indonesia's production - largely concentrated in northern Sumatra - has stagnated and it has precious few sources of proven new reserves.
But she adds that ministers are leaving the door open for it to return, should any future discoveries of oil transform the state of its industry.
Some analysts said the move may have been triggered by unhappiness about Opec's reluctance to increase output in the face of the recent price surge, which took the cost of a barrel of oil above $135....
Saudi Arabia walked out on OPEC yesterday, saying 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.
As the Saudis left the building, the message was shockingly clear. “Saudi Arabia will meet the market’s demand,” a senior OPEC delegate told the New York Times. “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 was due to "oversupply", 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 U.S. and European Union 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. The breadth of that deposit has now expanded.
OPEC needs the 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 about any possibility of dissolving, but the process is already over.
http://news.bbc.co.uk/2/hi/business/7423008.stm
Indonesia has said it will quit the oil producers' body Opec as it is no longer a net exporter of the commodity.
Energy minister Purnomo Yusgiantoro confirmed the move, which had been anticipated for some time.
Opec's sole member in South East Asia, Indonesia became a net importer of oil in recent times after production fell and it struggled to find new reserves.
Soaring oil prices have pushed up inflation in Indonesia and a recent cut to fuel subsidies prompted protests.
Production stagnates
Indonesia will leave the 13-member organisation when its membership expires later this year.
Opec has yet to comment on the development.
The BBC's Lucy Williamson in Jakarta says the decision is not unexpected, since Indonesia's production - largely concentrated in northern Sumatra - has stagnated and it has precious few sources of proven new reserves.
But she adds that ministers are leaving the door open for it to return, should any future discoveries of oil transform the state of its industry.
Some analysts said the move may have been triggered by unhappiness about Opec's reluctance to increase output in the face of the recent price surge, which took the cost of a barrel of oil above $135....