Tag Archives: OPEC

OPEC Production Cuts are a Joke

OPEC countries are reliant on oil and the cash flows they receive by selling oil at any price.

There will be no agreement to curtail supply. Reality and the incentive to cheat will trump talk and fantasy every time. What’s even more hilarious is that this time around they are inviting non-OPEC producers to cut production. These guys are gold:

LINK: Who Exactly Will Cut?

The oil market seems to be catching on lately as Brent oil is off around 12% from its mid-October highs:

brent

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They’ve Talked The Talk. Can They Walk The Walk?

The price of oil has surged recently on talks of production restrictions by OPEC and Russia:

Brent:
oil

At the Schroders conference in Lisbon in September, someone made a very interesting remark: “if the OPEC guys actually thought they could pull off production cuts, the price of Brent would be up through $60 on insider trading…” I had never quite thought of that ‘insider trading’ dynamic, but it makes sense:

1) An OPEC minister or a proxy calls his broker in London
2) Buys oil futures
3) Broker gets the hint, piggybacks on the trade.
4) This starts happening at a number of London brokers
5) Oil price gets driven up on evident insider trading

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