opec

[mkarpoff]

I just read online that Saudi Arabia might leave opec which, of course, would mean its dissolution. What do you think the ramifications of this would be were it to happen?

[dan_s]

Saudi Arabia + Russia really control the price of oil and Russian production cannot be ramped up or down quickly, so it is really up to Saudi Arabia.

I believe that today there is almost zero untapped oil production capacity. We are one "unplanned" supply disruption away from a big spike in oil prices.

Without OPEC, oil prices would probably have even wilder swings. This would not be good for the global economy.

[ChuckGeb]

Reports in Financial Times this week indicate Russia oil production is up 450m bond since May to 11.5 million and is poised to ramp another 300m by first of year. If accurate this seems like a pretty fast ramp up. Your thoughts.

[dan_s]

Just remember that "production" and "exports" are two totally different things. Like Saudi Arabia, Russia can increase exports in the short run, but I doubt they can increase production that fast. Russia has been increasing production by about 250,000 BOPD for several years. When they signed up with OPEC for the production cuts, all they did was reduce exports for a few months, they never did anything to slow production. Maybe this recent surge is just draining the storage tanks a bit before hard winter weather arrives.

Russia may also be trying to gain market share thanks to the drop in Iranian exports.