Letting oil shipments continue from the disrupted country is a move very much in tune with global markets. You usually don’t think of angry riots as having a collected thought line to them. This could calm down the oil run as people conclude that the transfer of government power will not constrict global crude oil supplies.
I think it’s interesting to wonder what this series of uprisings will do to the oil space. Keep in mind that several of the countries that are experiencing riots are also members of OPEC. Each one that falls will necessarily give more voting power to the remaining countries. That really means more power to the Saudi’s (as long as they can keep it together), since Saudi Arabia tends to be the black sheep of that family.
I think Woodshedder commented on this a while back, but:
It is strange to think, if enough damage is done to OPEC, while sparing the infrastructure of the countries, then oil prices may tend below $70 a barrel as the cartel unclenches its fist on reserves.
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There is also the chance of there being no cartel if all of the members fall to democracy groups.
Sorry, I should have put “democracy groups” in quotes.
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“Indeud”.
“Democratic” but also most likely “anti-Zionist” – and therefore more than likely to keep a bit of a premium on the earl until US “intelligence” figures out which way the wind is blowing…
BREAKING: Commodore Ritchie recalled from Pacific to help broker peace agreement between pro- and anti-Gadaffi forces.
(laughter) sure they’re not very democratic, but hey then, marketing was never about honesty.
Altogether, I just don’t see this middle east stuff keeping oil elevated for more than a year. Those countries couldn’t really afford not to sell us oil before; they sure as hell can’t afford to keep it from us now.
I agree with the idea that a fractured cartel should lead to more supply, but I am not sure OPEC was the reason for stupidly high oil prices. One thing is for sure, whoever is left over to sell oil to America must contend with that still maintained WTI-Brent differential and the implied direction prices need to go (lower).
CLP on a tear today, up 3.8% so far. All but NRP and MGM are up for the day, in the Talir.
Thaler,
I like your premise. I believe you have something here.
regards,
chuck
Thanks, feel free to stop by any time. I know you’ve made some great trades, and I always appreciate the input.
The Saudis remain the key as they were when OPEC was at it’s pinnacle … they have always offset cheating or supply issues within the group with their ability to expand or contract their own production for the benefit of all members … so the question now is how long can they afford to maintain that leadership?
Added to CLP for $19.03 a share. I doubled my position, which was only skeleton to begin with. Right now, I have a comparable amount of CLP to the rest of my holdings.