More OPEC Members May Leave

From comments made by Iran's OPEC governor: "Some producers have limited production capacity. Therefore, they may be faced with lower demand for production, while on the other hand, they lack any spare capacity for increased production, if need be," he said in comments published by Iran's oil ministry. "That strengthens the possibility of exit by minor member states. That is not impossible."

Well, well, well, have things changed? Of course he might just be muddying the waters ahead of the meeting to push prices up but I'm not too sure about it.

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OPEXIT

Is Opexit a word yet?

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This is the sort of reaction by countries I expect when peak oil demand is seen on the horizon. They know the cash has to be made now as soon the prices will crash. There seems to be a expectation by many in the industry that everyone will play the game to keep prices high by cooperating with very few small exceptions to coordinate a reduction of supply. That's not how humans work.

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watch how Venezuela will be out 2019... personally i dont see Venezuela being a member of the group anymore as its production falls further and below the threshold of the 1 millions of barrels per day. It will happen just as what happened with Indonesia. But of course since OPEC is a political organisation and the way i see it is running and anxious to get more members out of thin air (seriously Congo does not have to be a member of this bloc) in order to look alive even if its not and does not control the majority of the market, then i think Venezuela will stay although sadly its only for the pictures for whats going the minister of oil of Venezuela since he is doing nothing and he knows nothing about oil and oil diplomacy. 

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hhhhhhhhhhhhhhmmmmmmmmmmmmmmmm.   I posted this back on Oct 29th let me send a gentile reminder what I posted:

I have a feeling that the wind blowing the sail of OPEC+ will suddenly fall flat. The ability for the nations of OPEC+ will find it very challenging in coming future to bring their products to market to sell. US companies will suddenly see new life blow their way to fill their sail moving US into a position of oil dominance again.  Saudi Energy Minister Khalid al-Falih is trying to broker a deal with Russia to side step OPEC current conditions. Seems a bit odd to me, why would you try to make an open ended partnership with a new player in the world stage of oil  unless he senses something. While on the other side of the stage a large portion of transport companies are gearing up to build the rest of the pipeline in US moving crude from the north to Texas. The picture of puzzle is starting to be visible from what I can see. 

 

So this was found in the WSJ a little while ago:  

The reason for the negative prices is that, in the hot shale patches like the Permian and Bakken, gas bubbles up with the crude and much of it is flared. Local environmental regulators put limits on that practice, though, forcing drillers to sell it or pay someone to take it.

The surfeit of “associated gas” is another bearish sign for crude oil, because it shows how much North American crude is ready to flow onto the market once crucial pipelines are built. Oil exporters meeting next week in Vienna to stabilize the market are racing against the clock

https://www.wsj.com/articles/less-than-zero-natural-gas-anomaly-digs-up-more-trouble-for-oil-1543430397 

 

And here we are today. 

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"There is a sense of frustration prevailing, especially among small producers,” said Hossein Kazempour, Iran’s OPEC governor.

A frustration probably fueled by the feeling they just are asked to sign agreements previously decided in Saudi-Russia meetings.

https://www.bloomberg.com/news/articles/2018-12-03/qatar-s-opec-exit-shows-growing-sway-of-moscow-riyadh-oil-axis

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On 12/5/2018 at 9:34 AM, DA? said:

This is the sort of reaction by countries I expect when peak oil demand is seen on the horizon. They know the cash has to be made now as soon the prices will crash. There seems to be a expectation by many in the industry that everyone will play the game to keep prices high by cooperating with very few small exceptions to coordinate a reduction of supply. That's not how humans work.

OPEXIT Fever 

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On 12/5/2018 at 9:29 AM, Marina Schwarz said:

From comments made by Iran's OPEC governor: "Some producers have limited production capacity. Therefore, they may be faced with lower demand for production, while on the other hand, they lack any spare capacity for increased production, if need be," he said in comments published by Iran's oil ministry. "That strengthens the possibility of exit by minor member states. That is not impossible."

Well, well, well, have things changed? Of course he might just be muddying the waters ahead of the meeting to push prices up but I'm not too sure about it.

 

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Geo-politics no longer favour high oil prices, imagine the Saudi-Aramco IPO has to be suspended, America need low energy prices to manufacture competitively with China...hence, shale drillers will improve their technology to produce at even lower cost, and they will flood the market, making it difficult for OPEC to cut production, and the glut will lower prices even further...We are back in the age of industrial economy, what can you manufacture, so refiners and otherdownstream actors are actually gonna remain profitable though, but the oil and gas upstream sector will be phased out as a revenue earner, rather every oil producer will start selling petroleum products, instead of the raw crude oil.

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2 hours ago, rafattt said:

OPEXIT Fever 

Yup irrational behaviour can be counted on from humans.

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4 minutes ago, DA? said:

Yup irrational behaviour can be counted on from humans.

For some people, rationality is subjective/relative.

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What we must discover is their long term goals/fixations/obsessions...

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5 minutes ago, Specyoulator said:

For some people, rationality is subjective/relative.

People are just very good at justifying opinions.

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Yup, it's about easing the anxiety.

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If MBS wants to help Saudi Arabia transition from an oil-economy to other type of economy then cutting oil production is not important for him/the kingdom..

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On 12/5/2018 at 2:32 AM, Tom Kirkman said:

OPEXIT

Is Opexit a word yet?

It is now.   Congratulations for coining the term..!!!

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On 12/5/2018 at 10:14 AM, jose chalhoub said:

watch how Venezuela will be out 2019... personally i dont see Venezuela being a member of the group anymore as its production falls further and below the threshold of the 1 millions of barrels per day. It will happen just as what happened with Indonesia. But of course since OPEC is a political organisation and the way i see it is running and anxious to get more members out of thin air (seriously Congo does not have to be a member of this bloc) in order to look alive even if its not and does not control the majority of the market, then i think Venezuela will stay although sadly its only for the pictures for whats going the minister of oil of Venezuela since he is doing nothing and he knows nothing about oil and oil diplomacy. 

I don't see Venezuela withdrawing from OPEC, mainly due to the lack of prestige, and basically admitting they are falling apart.

 

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On 12/5/2018 at 11:14 AM, jose chalhoub said:

watch how Venezuela will be out 2019... personally i dont see Venezuela being a member of the group anymore as its production falls further and below the threshold of the 1 millions of barrels per day. It will happen just as what happened with Indonesia. But of course since OPEC is a political organisation and the way i see it is running and anxious to get more members out of thin air (seriously Congo does not have to be a member of this bloc) in order to look alive even if its not and does not control the majority of the market, then i think Venezuela will stay although sadly its only for the pictures for whats going the minister of oil of Venezuela since he is doing nothing and he knows nothing about oil and oil diplomacy. 

I have some friends in Caracas.

They say everyone is holding their breath waiting for the government to be overthrown.

They hope it is the Americans,  but would be just as happy if Brazil stepped in and did it.

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It is obvious that Saudi influence has become too dangerous for the entire World. Their only source of income is oil. By keeping low oil prices Saudis will be crushed within 2 years, and the most valuable favour in this century to mankind will be achieved. Their values are not fitting anywhere anymore. No money for AlQaida, no money for ISIS.No money for explosive wests, no money for Muslim Brotherhood.

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On 12/5/2018 at 1:34 AM, DA? said:

This is the sort of reaction by countries I expect when peak oil demand is seen on the horizon. They know the cash has to be made now as soon the prices will crash. There seems to be a expectation by many in the industry that everyone will play the game to keep prices high by cooperating with very few small exceptions to coordinate a reduction of supply. That's not how humans work.

 

1 hour ago, t566480 said:

It is obvious that Saudi influence has become too dangerous for the entire World. Their only source of income is oil. By keeping low oil prices Saudis will be crushed within 2 years, and the most valuable favour in this century to mankind will be achieved. Their values are not fitting anywhere anymore. No money for AlQaida, no money for ISIS.No money for explosive wests, no money for Muslim Brotherhood.

There are a couple things it would be nice to accomplish: 
1) Oil prices high enough to drive new technologies (E.g. electric cars), but not high enough to skewer poor people.
2) Ending Middle Eastern wealth, influence, and violence. 
3) Putting a larger share of production in the hands of stable countries.

Personally, I'd like to see the world intentionally squeeze OPEC out of the market as we're able to bring alternative supplies online.  Do you two have any thoughts on that? 

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1 hour ago, t566480 said:

It is obvious that Saudi influence has become too dangerous for the entire World. Their only source of income is oil. By keeping low oil prices Saudis will be crushed within 2 years, and the most valuable favour in this century to mankind will be achieved. Their values are not fitting anywhere anymore. No money for AlQaida, no money for ISIS.No money for explosive wests, no money for Muslim Brotherhood.

I am glad that i am not a member of the Saudi Royal family.

They have a very hard job ahead.

They are the figurehead of an entire religion,  and are trying to slowly "adapt" that religion to modern times in such a way that they do not get themselves targeted by the "far-right" of their religion who continually resist the changes needed..

They simultaneously run a huge country,  with millions of citizens,  in a very controlled culture.

And they have to do all of the above with only one source of income, Oil.

And,  as part of their international relations,  they have kept OPEC organized.   Which is no easy task.

The family itself is highly educated from Western Schools.

They are continually walking a tight rope.

Given the alternative of what the "vacuum" would be filled by if the Saudi's were to be overthrown,  I would prefer that they remain in power,  and continue what they have been doing.   Minus the periodic funding for terrorism.

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I agree on that. Wind energy is cheaper than oil energy per kWh. Oil should end in the same basket as coal. Why to be dependent on Saudis, and finance terorism with every galon you buy on a gas station???? This should end ASAP for the sake of the whole western civilisation.

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3 minutes ago, Illurion said:

I am glad that i am not a member of the Saudi Royal family.

They have a very hard job ahead.

They are the figurehead of an entire religion,  and are trying to slowly "adapt" that religion to modern times in such a way that they do not get themselves targeted by the "far-right" of their religion who continually resist the changes needed..

They simultaneously run a huge country,  with millions of citizens,  in a very controlled culture.

And they have to do all of the above with only one source of income, Oil.

And,  as part of their international relations,  they have kept OPEC organized.   Which is no easy task.

The family itself is highly educated from Western Schools.

They are continually walking a tight rope.

Given the alternative of what the "vacuum" would be filled by if the Saudi's were to be overthrown,  I would prefer that they remain in power,  and continue what they have been doing.   Minus the periodic funding for terrorism.

No. Let them fall apsrt. The issue with terrorism will be dealt with easier if there is no money.

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