Russia Sees Diminishing Role for OPEC in Regulating World Oil Prices
Russia Sees Diminishing Role for OPEC in Regulating Oil Prices
Moscow, Feb. 19 (Bloomberg) -- The role of the Organization of
Petroleum Exporting Countries on world oil prices is diminishing
because its members control less than one-third of world oil
production, said Russian Deputy Prime Minister Vladimir Bulgak.
''We should not overestimate the role of OPEC,'' Bulgak said
at a government meeting. ''OPEC's share of world oil production is
just 30 percent and the organization stopped being an effective
instrument for regulating world oil prices.''
Russia recently backtracked on earlier promises to reduce oil
exports, saying it will slash production of oil products, rather
than crude oil. Fuel and Energy Minister Sergei Generalov pledged
to extend until July 1999 a plan to lower exports by 80,000 barrels
a day to restrain world oil supply and bolster prices.
Since July, Russian crude oil exports have been steadily
rising.
Brent crude fell about 36 percent over the last year.
''No matter how many times you meet them, there's no internal
discipline or internal agreement within OPEC,'' Bulgak said.
This article is interesting for a number of reasons. The Russians are just as desperate as anyone to get oil prices up, maybe more. They are getting their butts kicked and need cash. I think we are going to see a lot of this kind of thing up to the meeting. This is a press release, designed to produce an effect, same as when Venezuela said if anyone cheats, they weren't going to cut, but would take, "other steps." They are sending messages to the citizens of each other's countries, to put on pressure. Russia made it obvious that OPEC can't do it alone, needs other producers to join, and it is publicly taunting the OPEC countries for their disorganization and failures. It was not their purpose to declare OPEC dead and ineffective, so oil prices will stay down forever. They want an agreement, and are probably willing to join, but they want OPEC to get it together, and probably want other countries in it. Norway and Mexico are lining up. I have no idea if the Russian's promise are worth mud. They don't have a good history, but their oil business relationships with Iraq, Iran, and maybe others is expanding. I don't think those countries would be very happy to give development business to Russia, if Russia screws them. No producing country, with the remotely possible exception of Saudi Arabia, (the last man standing) gains anything by prolonging this, and all have much to gain by supporting prices.
There will be other messages being sent out in similar manners up to the OPEC meeting. I think they want the populations of these countries, who are the ones really suffering, to demand action from their Governments. And no screwing it up. Public dissatisfaction is what got Chevez elected, and the natives are restless in all of them. I can't imagine that any OPEC country wants to go home after the meeting and report, "what the hell, we decided to keep pumping and see how long we can last." Vs going home heroes because they've saved at least part of the world. At least that's my read.
It's going to be a roller coaster ride to the meeting. The suspense will be awful. Oil ministers will have the press following them around like they were movie stars, and every word they say will be analyzed, dissected, interpreted, and will be announced as evidence of total doom or salvation. The words the ministers utter will be carefully chosen, and with specific results desired. By the time the results of the meeting is announced it will be a bigger event than the Second Coming. The pressure on the producing countries will be awesome. If I didn't have so damn much riding on it, I would be enjoying the show immensely. Guaranteed chills and thrills.
Will they or won't they? I don't know. News at 10.
Mike from La.
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