Image from My Oil BlogOPEC Risks Split on Cuts as Economies Reel, Oil Drops -- Bloomberg
Oct. 22 (Bloomberg) -- OPEC, founded five decades ago to unify oil producers, risks dividing members as the group plans to cut output and raise prices just as developed nations face their worst recession since 1983.
Iran's energy minister, Gholamhossein Nozari, said yesterday OPEC may slash output quotas by 2.5 million barrels a day, or 8.7 percent, an amount about equal to what's pumped from Kuwait. The Algerian minister and OPEC president, Chakib Khelil, said two days earlier the reduction at the group's Oct. 24 meeting in Vienna may be only 1 million barrels.
The debate in the Organization of Petroleum Exporting Countries pits Saudi Arabia, the group's biggest producer and a U.S. ally, against Venezuela and Iran, two nations that oppose U.S. foreign policy and advocate higher oil costs. Crude has plunged 53 percent from its July 11 record of $147.27 on the New York Mercantile Exchange. It traded at $69.37 today.
Read more ....
My Comment: The more that they cut oil production .... the higher the price goes .... the greater the recession .... the lower the price goes. OPEC is trying to fiddle with market forces, and is failing miserably. But the big difference from the past is that the populations of some OPEC nations now have high expectations of benefiting from high prices.
They are going to be disappointed.
The instability and anger from this disappointment is the big fear within the governments of unstable countries like Venezuela and Iran. Promises have been made, expectations are high, but they cannot follow through.
Like a drug addict that cannot get his drugs, what will these countries do when they cannot get the money that they need.
My speculation all points to bad scenarios.