OPEC does it again

In another (to quote the most overused word in the English language) "unexpected" move, OPEC today in a meeting in Vienna has failed to agree on an increase in production in spite of oil prices staying above $100.00 per barrel.  This despite Saudi Arabia's push to increase production in order to keep price low enough as to not damage the global economy.  (OPEC controls 40% of global supplies)

Why was this unexpected?  This move signals the first time since 1998 that Saudi Arabia, the largest oil produced in OPEC, no longer has de facto control over the cartel's direction, and oil consuming countries can no longer rely on OPEC to follow Saudi Arabia's price-moderating influence.  Further politics and domestic economic factors now play a major role in the decision making process as the majority of cartel members now see crude oil prices significantly above $100.00 as a floor not a ceiling.

Venezuela and Iran head up a block of countries now more hostile to Western interests thanks to the developments of the Arab Spring and the decline of the value of the US Dollar.  Additionally these nations need much higher prices, due to domestic factors, which require oil to remain above $100.00 per barrel.  Libya has its own reasons for opposing any production increase namely NATO's involvement in the ongoing military stalemate.

So don't look for any relief at the gasoline pump.  It will not be available as the US continues to shut down offshore drilling and put off limits other crude oil sources and continues to rely on the whims of cartels such as OPEC. 

In another (to quote the most overused word in the English language) "unexpected" move, OPEC today in a meeting in Vienna has failed to agree on an increase in production in spite of oil prices staying above $100.00 per barrel.  This despite Saudi Arabia's push to increase production in order to keep price low enough as to not damage the global economy.  (OPEC controls 40% of global supplies)

Why was this unexpected?  This move signals the first time since 1998 that Saudi Arabia, the largest oil produced in OPEC, no longer has de facto control over the cartel's direction, and oil consuming countries can no longer rely on OPEC to follow Saudi Arabia's price-moderating influence.  Further politics and domestic economic factors now play a major role in the decision making process as the majority of cartel members now see crude oil prices significantly above $100.00 as a floor not a ceiling.

Venezuela and Iran head up a block of countries now more hostile to Western interests thanks to the developments of the Arab Spring and the decline of the value of the US Dollar.  Additionally these nations need much higher prices, due to domestic factors, which require oil to remain above $100.00 per barrel.  Libya has its own reasons for opposing any production increase namely NATO's involvement in the ongoing military stalemate.

So don't look for any relief at the gasoline pump.  It will not be available as the US continues to shut down offshore drilling and put off limits other crude oil sources and continues to rely on the whims of cartels such as OPEC. 

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