Published in Fox Business
Omar Al-Ubaydli, affiliated senior research fellow at George Mason University’s Mercatus Center, said the meeting’s outcome was 100% predictable and all the bluster about a growing rivalry between Iran, which earlier this year saw relief from international trade sanctions, and Saudi Arabia is a distraction. The bottom line, he said, is there is no international cartel in any commodity – be it gold, copper, wheat, and even oil. Rather, he contends the swift swoon in oil prices in the summer of 2014 to the recovery crude has made so far this year, is a simple act of market forces. ”The market is bigger than any of these nations,” he said. “There is a large enough number of producers that no one nation is going to do anything to steer prices in one direction. Like any other commodity, there are ups and downs.” Al-Ubaydli said while it’s good publicity for OPEC nations to make it seem as though there were active policy negotiations, for the most part, it’s smoke and mirrors. “Western countries were happy to let OPEC think it had power because they could blame [low prices] on any difficulties. OPEC likes to think it has power because they get to say we’re sticking it to the man, and holding the West by its throat…but ultimately it’s about politics in each country,” he said. Continue
0 Comments
Published in MarketWatch
Of course, there are those who argue that OPEC doesn’t have any real power to control the oil market—especially without sizable surplus capacity. “The only significant ‘force’ was Saudi Arabia volunteering to maintain large excess capacity for geostrategic reasons,” said Omar Al-Ubaydli, a program director at the Bahrain Center for Strategic, International and Energy Studies. But OPEC is slowly “ditching” this strategy. The oil market is “99% supply and demand, just like every other commodity,” he said. “Two of the world’s three biggest producers, the U.S. and Russia, aren’t even in OPEC,” said Al-Ubaydli. “Worst cartel ever.” Instead, oil prices have managed to head higher based on decreasing investment in the industry, as well as temporary factors, such as the recent disruption to Canadian production, he said. Al-Ubaydli, who’s also an affiliated senior research fellow at the Mercatus Center at George Mason University, predicted that Thursday’s OPEC meeting will “lead to nothing.” It’ll just be “more grandstanding so that oil ministers can tell their constituents that they are trying hard.” “If oil prices move, it will be mundane demand and supply factors and nothing else,” he said. “OPEC’s role is precisely zero.” Continue |
Omar Al-Ubaydli
This is where you can find all my articles, as well as some of my interviews and media mentions Archives
June 2020
Categories
All
|