Dec 07, 2015

The recent OPEC meeting (December 4) ended without any agreement on cutting back on oil production. That means prices will continue to decline or stay at the current low prices around $40/barrel.

Essentially, we could be seeing the break-up of OPEC. Its purpose was to regulate production by assigning quotas to each member nation. It appears that this has now ended, and the oil-producers are now able to pump as much oil as they choose. OPEC is now dead insofar as its control of prices is concerned.

It appears that OPEC was destroyed by Iran. You can thank them later.

http://www.reuters.com/article/us-opec-meeting-idUSKBN0TM30B20151205#Ixydh4cgt0pRBhh6.97

“OPEC members failed to agree an oil production ceiling on Friday at a meeting that ended in acrimony, after Iran said it would not consider any production curbs until it restores output scaled back for years under Western sanctions.

“Friday's developments set up the fractious cartel for more price wars in an already heavily oversupplied market….

“OPEC's secretary general Abdullah al-Badri said OPEC could not agree on any figures because it could not predict how much oil Iran would add to the market next year, as sanctions are withdrawn under a deal reached six months ago with world powers over its nuclear program.

“Most ministers left the meeting without making comments.

“Badri tried to lessen the embarrassment by saying OPEC was as strong as ever, only to hear an outburst of laughter from reporters and analysts in the conference room.”

Low oil prices is good for consumers who will continue to pay less at the pump. It is also bad for big oil companies, who make money on percentages of the price of oil. Now they are selling about the same quantity of a commodity that has less value, while their cost of production remains the same. The nations who lease the oil fields will also make less money, because they have contracts on oil production.

Watch for some nations like Saudi Arabia to go through their foreign reserves at a fast pace. They will have to pull money out of the markets, which could cause depressions around the world. Nations will have to go further into debt, and some could well go into default. Mexico is particularly at risk right now.

Shale oil companies are losing money with every barrel of oil that they pump. The high cost of drilling and production will make them the first to call it quits. North Dakota should prepare for less revenue, at least in the near future.

Since Iran is old Persia, it seems fitting that Iran’s actions would put the final nail into the coffin of OPEC. They have been storing oil in big tankers for many years, waiting for the sanctions to be lifted. They will not be denied access to the markets, after being relatively unproductive for so long. And since they hate the Saudis, they are not about to cooperate with them by reducing oil production. So now they compete to see who can produce the most oil in order to make any money at all.

Keep in mind, too, that the board members of Big Oil are the same as the board members of Big Banks. What problems the big oil companies will also affect those banks. These are the main oligarchs of Babylon. As in the days of old, Persia is doing its part to overthrow Babylon.

Oil has been priced in US petro-dollars since the early 1970’s. Conversely, this also means that the price of petro-dollars is valued in oil. Their fate is tied together until the dollar breaks away to be restored to the gold standard. Nixon took the dollar off the gold standard in 1971, and tied it to oil to prop up the dollar’s value. The US dollar has been on an oil standard for the past 40 years. That is sure to end soon.