If the primary motivation of the rich is greed, then the OPEC member states are no exception. Now that oil prices have begun to drop, so has talk of cutting supply.
"The market is oversupplied by at least 1 million barrels a day. If OPEC would like to remove this additional oil out of the market, then OPEC has to cut some production," OPEC governor Mohammad Ali Khatibi told Dow Jones
That would mean that, at the most basic level, oil prices might never drop much from current levels.
There has been some hope, with little foundation in evidence, that oil will drop back below $100 a barrel. The basis of the argument for that is that, as the world economy slows, so will the need for crude. It ignores the likelihood China and other emerging markets will continue import more crude. It also assumes that the rising amount of oil that large exporters use to build their own infrastructures and fuel their own cars will level-off.
OPEC has had the benefit of seeing the tremendous yield it gets when crude is at $120. There is no need for the cartel to give that up. It can act as a puppeteer and move the strings of supply, And, so it will.
Douglas A McIntyre
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