Tag Archives: OPEC

Why China Is Being Flooded With Oil: Billions In Underwater OPEC Loans Repayable In Crude, by Tyler Durden

Posted on by
Reply

“When the price of oil was above $100, many of the less developed oil exporting OPEC members decided to capitalize on the high price and cash out by taking loans using the precious liquid as collateral … However, few oil exporters anticipated such an acute oil plunge in such as short time span, which resulted in the value of the collateral tumbling by 70%, and now find themselves have to repay the original loan by remitting as much as three times more oil!”

STRAIGHT LINE LOGIC

Here’s one of the dumber borrower schemes out there, and a bunch of clueless governments in oil producing countries are at the heart of it: borrow money and agree to pay back the equivalent amount in barrels of oil, not using the market value of oil at the time the deals are struck, but at the time the loans must be repaid. So loans incurred when oil was above $100 a barrel now must be repaid with oil that is only valued at $40-$50 a barrel, meaning debtors must repay 2 to 3 times the amount of oil they would have had oil prices stayed high. The Chinese, the creditor on the other side of these transactions, receive a lot more oil, but they’re running out of storage and refinery capacity. From Tyler Durden at zerohedge.com:

When the price of oil was above $100, many of the less developed oil…

View original post 406 more words

Advertisement

5 Reasons Oil Prices Are Dropping

Posted on by
2

Key contributing factors in the fall in oil prices range from surprise production levels in Libya to, in-fighting between OPEC members and EU economic outlook…

Source: oilprice.com

“> […]

1. The U.S. Oil Boom
America’s oil boom is well documented. Shale oil production has grown by roughly 4 million barrels per day (mbpd) since 2008. Imports from OPEC have been cut in half and for the first time in 30 years, the U.S. has stopped importing crude from Nigeria.

2. Libya is Back
Because of internal strife, analysts have until recently assumed that Libya’s output would hover around 150,000-250,000 thousand barrels per day. It turns out that Libya has sorted out their disruptions much quicker than anticipated, producing 810,000 barrels per day in September. […]

3. OPEC Infighting 
There have been numerous reports about the discord between OPEC members, leading many to believe that OPEC will not be able to reign in production like it has done so in the past. The Saudis and Kuwaitis have reportedly been in an oil price war, repeatedly lowering their prices in order to maintain their market share in Asia. […]

4. Negative European Economic Outlook
European Central Bank president Mario Draghi has left investors concerned about the continent’s slow growth. Germany’s exports were down 5.8 percent in August, stoking the fears of anxious investors that the EU’s largest economy had double dipped into recession last quarter. Across the Eurozone, the IMF again lowered its growth forecast to 0.8 percent in 2014 and 1.3 percent in 2015.

5. Tepid Asian Demand 
Beyond slow economic growth and currency depreciation, a number of Asian countries have begun cutting energy subsidies, resulting in higher fuel costs despite a drop in global oil prices. […]”<

 

See on Scoop.it – Green & Sustainable News

Price of Oil Continues to Drop Due to Oversupply

Posted on by
1

The price of oil has hit another five-year low as fears of oversupply continue to mount.  Brent crude was down $1.77 at $67.30 a barrel in Monday afternoon trading, having earlier hit $66.77 – its lowest since October 2009.

Source: www.bbc.com

>” […]US crude was down $1.44 at $64.40, after falling as low as $64.14.

Morgan Stanley predicted that Brent would average $70 a barrel in 2015, down $28 from a previous forecast, and be $88 a barrel in 2016.

The investment bank also said that oil prices could fall as low as $43 a barrel next year. Analyst Adam Longson said that markets risked becoming “unbalanced” unless the Opec producers’ cartel decided to intervene.

Saudi Arabia, the cartel’s biggest member, resisted calls at last month’s meeting to cut production despite the slide in prices, which have fallen more than 40% since June.

Kuwait, another Opec member, said that oil prices were likely to remain about $65 a barrel until the middle of next year unless Opec cut output. […]”<

See on Scoop.it – Green & Sustainable News

1973-74 Oil Crisis – Timeline – Slaying the Dragon of Debt – UC Berkeley

Posted on by
Reply

See on Scoop.it – Green & Sustainable News

Between October 1973 and January 1974 world oil prices quadrupled. By putting an end to decades of cheap energy, the 1973-74 oil crisis, which was led by Arab members of the Organization of Petroleum Exporting Countries (OPEC), exacerbated the economic difficulties facing many industrialized nations, forced developing countries to finance their energy imports through foreign borrowing, and generated large surpluses for oil-exporters.

Duane Tilden‘s insight:

>The 1973-74 oil crisis followed years of often acrimonious negotiations between members of the Organization of Petroleum Exporting Countries (OPEC) and Western oil companies over petroleum production and pricing levels. Richard Nixon’s decision to take the U.S. off the gold standard in 1971 was of particular importance in contributing to the oil crisis.

Because oil prices were denominated in dollars, the devaluation that accompanied the end of the Bretton Woods monetary regime negatively impacted oil exporting countries and led OPEC officials to consider remedial steps, such as pricing oil in gold instead of dollars. Little came of these efforts until October 1973, when Arab members of OPEC, in response to the outbreak of the Yom Kippur War, raised the posted price of crude by 70% and placed an embargo on exports to the U.S. and other nations allied with Israel.

Although the fighting ended in late October, OPEC continued to use the “oil weapon” over the coming months. In November oil exporters cut production 25% below September levels, and the following month they doubled the price of crude. By January 1974 world oil prices were four times higher than they had been at the start of the crisis.<

See on bancroft.berkeley.edu