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November 2, 2016

This is What The Market Wants To Hear Out of OPEC (Video)

By EconMatters

The last couple of weeks have not helped OPEC convince the Oil Market that they are going to be able to come together and make an organized production cut and tighten the oil market going forward.

Act like a Cartel for goodness sake, or just disband altogether because you are only hurting all of your group`s individual interests by internal conflict and constant bickering. I put together a roadmap for OPEC members to follow for this upcoming meeting.

All groups have internal conflict, but these conflicts are best handled behind closed doors, public airing of differences only serves to weaken the organization`s overall impact and influence on the market.

Even the Mafia realized the value of cooperation in benefitting everyone`s business interests
as a whole versus the time and energy bickering and fighting each other over lower level disputes.

Iraq should think in terms of overall net oil revenues and not oil volumes because the goal is to make the most money for the country, and a tighter oil market with a much higher average oil price for the year brings in far more oil revenue than having slightly lower oil production numbers.

Each OPEC member actually benefits to a larger degree by reducing production slightly, individually sacrificing if you will, but the rewards of a slight sacrifice can make the difference between a $20 a barrel average selling price for the year, given that oil is a commodity and has quite a range in what it can be effectively priced at within a broad commodity band.

Just think in terms of permanently knocking the shorts out of the market who have routinely pushed oil to the lower end of the average selling band for the year. In short, OPEC needs to change the psychology of the oil market. The higher prices go, the lower a country or organization needs to produce. Never cheapen your brand!

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