OPEC has been on auto-pilot for the last year. Anyone who
had any spare oil, put it on the market, Asian consumers would soak it up,
Forbes writes. . Prices firmed nicely above $100/b, more than enough to keep
petro-states in the black. If anything, OPEC’s problem was finding sufficient
oil to cover supply side gaps within the cartel from Iranian sanctions, not to
mention supply side slippages across a string of non-OPEC states from ‘Syria to
Sudan’. The long term cartel king, Saudi Arabia stepped into the breach,
consistently pumping above 9.5mb/d since June 2011 – the longest sustained
period of such production levels for 11 years. It pushed production well above
10mb/d into 2012, with OPEC output increasing from 30.8mb/d in January to
31.75mb/d in May. It was a close run thing, but prices never breached $130/b, a
figure many analysts thought would bring the entire house of global economic
cards caving in. Crisis averted.
But having made easy money ‘moderating prices’ at the top,
OPEC now faces a far more daunting challenge: How will the cartel protect a
$100/b price flaw amid broken demand side fundamentals..
Read all about it at http://www.forbes.com/sites/matthewhulbert/2012/06/10/opecs-pending-bloodbath/
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