Sunday, November 30, 2008

OPEC "has no business model"

AP:
"There is total confusion" among OPEC's 13 members, said Fadel Gheit, managing director of oil and gas research at Oppenheimer & Co. in New York. "These people ... really have no business model. They basically thrive when oil prices go up, and now they are crying uncle when prices go down."

And, down they have gone, in a financial avalanche triggered by demand destruction, itself sped along by a world financial meltdown that also threatens to cut deeply into OPEC member states' government budgets.
WSJ:
The Organization of Petroleum Exporting Countries decided Saturday to put off any fresh action over whether to further cut its production until it meets again in mid-December, said Head of Libyan National Oil Co., Shokri Ghanem.
Times are tough. How does this play into OPEC agreements? Is it harder to agree? Is there more incentive to cheat on agreements? Is it even in OPEC's interest to cut output and possibly exacerbate the worldwide downturn?

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