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Energy / Oil Prices

  • OPEC Refuses To Cut Production, Sending Oil Price Down Again

    OPEC has resisted the urging of its needier members and has decided not to cut production levels despite the five-month-old plunge in oil prices. Saudi Oil Minister Ali al-Naimi said the 12 ministers at the meeting at OPECs’ Vienna headquarters on Nov. 27 decided to keep the production level at 30 million barrels per day, a ceiling set nearly three years ago. The oil market responded immediately, with Brent crude dropping $3 to below $75 per barrel for the first time since September 2010. The global price of oil has declined by more than 30 percent since mid-June because of…

  • Russia Expects Oil Price To Rise, But Not Enough To Balance Moscow’s Budget

    Russia can’t live with oil prices below $79 per barrel, but Finance Minister Anton Siluanov says he doesn’t expect them to drop much lower, and they may even rise a bit in the medium and long term. Still, he says, that won’t be enough to stabilize Russia’s strained budget. Two-thirds of Moscow’s annual budget comes from taxes on Russia’s oil and natural gas companies. The budget laid out for 2015 requires an oil price of $100 per barrel. Now Siluanov has come to agree with many energy analysts that that the price will remain around $80 for the foreseeable future.…

  • Saudi Sending Negative Signals Ahead Of OPEC Meeting

    Saudi Oil Minister Ali al-Naimi says there’s no need for OPEC to reduce production to shore up the price of oil because the market will fix itself. Despite his optimism, Russia said it would refuse to cut output, apparently threatening a price war over oil. “The market will stabilize itself eventually,” al-Naimi told reporters on Nov. 25 in Vienna, where some of the world’s biggest oil producers were meeting two days before OPEC’s summit at its headquarters in the Austrian capital. The cartel’s meeting is crucial because oil prices have plummeted by about 30 percent since mid-June, from around $110…

  • Veteran Oil Minister Says OPEC Alone Can’t Set Oil-Price Levels

    OPEC alone can’t be held responsible for setting the price of oil worldwide, a veteran oil minister says, and it’s time for producers outside the cartel to help set acceptable prices for oil. Abdullah Bin Hamad Al Attiyah, who served as Qatar’s oil minister for nearly 20 years, says the 30 percent drop in the price of oil since mid-June has left OPEC’s 12 members disunited on how to shore up revenues. “OPEC can’t balance the market alone,” Al Attiyah told Bloomberg by telephone on Nov. 19. “This time, Russia, Norway and Mexico must all come to the table. OPEC…

  • What Low Oil Prices Mean For The U.S. Economy

    For the last 4 years, the national average retail price of gasoline in the United States stayed within a range of $3.25-$4.00 a gallon. But that all changed this fall, with U.S. consumers now paying an average price of $2.82. This usually is the time of year when gasoline prices tend to be at their lowest. But the current U.S. price of gasoline is exactly what we’d predict given the long-run relation between the price of gasoline and crude oil. There’s essentially no seasonal component in the price of crude. In other words, if crude stays at its current value…

  • Russia Can Survive An Oil Price War

    After a frosty reception at the G20 summit in Australia this week, Russian President Vladimir Putin required some much needed rest, at least according to the official explanation given for his conspicuously early departure from the proceedings. All things considered it could have been a lot worse. Russia finds itself in familiar territory after a controversial half-year, highlighted by the bloody and still unresolved situation in Ukraine. Nonetheless, the prospect of further sanctions looms low and Russia’s stores of oil and gas remain high. Shortsighted? Maybe, but Russia has proven before – the 2008 financial crisis for example– that it…

  • State Budgets Reeling from Low Oil Prices

    There has been a lot of attention paid to the harm that the oil industry is experiencing in the face of declining oil prices, but there has been little talk about how strained state budgets may become due to lower oil tax revenues. Several states in the U.S. that are overly dependent on oil to meet their budget forecasts are starting to come to grips with the fact that their spending plans may not work in a low priced environment. Oil prices have dropped by more than 30 percent since the summer, with WTI prices dropping below $75 per barrel…

  • The Economic And Strategic Implications Of Low Oil Prices

    If oil prices continue to spiral downward, what will be the economic and strategic results? Not too bad, says Gawdat Bahgat. Consumers will benefit at the expense of producers and, perhaps more controversially, the ‘oil for security’ bargain crafted between Western powers and Middle Eastern suppliers will remain intact. Shortly after the 1973 Arab-Israeli war Arab oil producing countries cut production and imposed an oil embargo on the United States and a few other countries in retaliation for their support of Israel. This led to a rapid surge in oil prices that came to be known as the first ‘oil…

  • Is Saudi Arabia Waging Economic Warfare?

    The G20 is a conference of the world’s top 20 economies as measured by Gross Domestic Product. Some observers have slammed it as an unelected and arbitrary body that is doing some of the work the United Nations was intended to do– only in a much less egalitarian way. The official web site notes. “The G20 membership comprises a mix of the world’s largest advanced and emerging economies, representing about two-thirds of the world’s population, 85 per cent of global gross domestic product and over 75 per cent of global trade. The members of the G20 are Argentina, Australia, Brazil,…

  • Want To Hurt Russia? Lower The Price Of Oil

    Why would the oil producers, who have over the years raised the price of oil at every opportunity they got suddenly agree to drop the price from roughly $120 a barrel to about $80 a barrel? Saudi Arabia, the largest producer of oil and gas in the Middle East said the revision of the price of oil downwards was done in order to adjust the markets. Hmmm, have they indeed? Perhaps a better explanation can be found in analyzing who stands to gain the most and who stands to lose the most from this sudden shift in oil prices. The…