The death of OPEC

Don't Worry Folks !!!!!!!!!!
The so called savior of the world THE US will also stage a war with Saudi...........
If this situation doesnot resolve easily there will be definitely shortage and rise of Crude Oil.......

 

Yes, with new production coming to the markets in 2009, and extensive demand destruction in the US due to economic slowdown, we could see oil prices at less than $80 per barrel.

Check out http://en.wikipedia.org/wiki/Oil_megaprojects

ANd here's a graph for expected new supply coming to the market in 2009

OPEC has always been over-producing their quotas. It would be interesting to see how much excess capacity Saudi's have, and how much new oil can come on the markets with this new Saudi move. But demand destruction and economic slowdown would definitely bring prices down, at least for a while...

 

I suspect the Saudis don't want the world to lose cheap oil so early, don't want any innovation in alternative energy sectors, so that they can keep the world at ransom if someone gets a bright idea of planting a "democracy" in that country. Saudis must continue to keep the world addicted to cheap oil and ensure all alternative energy research dies off due to being economically non-viable. Thats their ace card.

 

For most of the 1990's OPEC wasn't effective in driving prices higher.

In a volatile political environment within OPEC walking out of a meeting is a very effective negotiating strategy for the biggest producer, Saudi Arabia when a bunch of smaller producers are joining together with one voice that is contrary to Saudi Arabia's perspective.

I'd bet they will continue to operate in some sort of cartel, subject to very different perspectives from different members.

I think calling this OPEC's death is premature.

The world's biggest user, the US is seeing an economic slowdown and has and will be reducing demand somewhat in the near term. Price increases in Europe and an economic slowdown will reduce demand.

Meanwhile demand keeps growing in developing nations like India and China. Over the longer term demand will keep increasing and OPEC will have plenty of leverage. As a group of oil exporting nations I don't think it is going anywhere.