Start of OPEC Mafia collapse?

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mimico_polak

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First member stating they’re leaving OPEC. Probably seeing the writing on the wall as oil demand crashes due to pricing and they’re limited by artificial limits to boost revenues…

www.thenationalnews.com

UAE announces it will leave Opec | The National

Abu Dhabi will exit the exporters' group on May 1 to pursue an independent output strategy
www.thenationalnews.com www.thenationalnews.com

I welcome the failure of any monopoly / mafia organization that works to artificially boost pricing.
 
It’s going to be interesting to watch. Having volume and pricing independence for UAE should drop oil prices as they are the lowest cost producer and have giant reserves.

Independence and low cost will also give them a lot of regional power as they reduce prices to capture volume.
 
Mad Mike said:
It’s going to be interesting to watch. Having volume and pricing independence for UAE should drop oil prices as they are the lowest cost producer and have giant reserves.

Independence and low cost will also give them a lot of regional power as they reduce prices to capture volume.
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The fact they are doing this now means they think prices are going higher and will stay that way. this is a way to maximize profits it won't reduce prices in any way.

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Scuba Steve said:
The fact they are doing this now means they think prices are going higher and will stay that way. this is a way to maximize profits it won't reduce prices in any way.

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It may not drop prices but it can keep them from rising as fast or far. It all depends how they play with the taps. Now there is another major player with the ability to control prices. An interesting play would be to partner with refiners and major consumers (like airlines) for long-term fuel contracts. Airline likes it as costs are fixed. UAE likes it as their production costs are miles below the contract cost and they have a long term high volume client.
 
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GreyGhost said:
It may not drop prices but it can keep them from rising as fast or far. It all depends how them play with the taps. Now there is another major player with the ability to control prices. An interesting play would be to partner with refiners and major consumers (like airlines) for long-term fuel contracts. Airline likes it as costs are fixed. UAE likes it as their production costs are miles below the contract cost and they have a long term high volume client.
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They don't produce enough to have any meaningful effects on the market this is just easy profit taking right now.

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Scuba Steve said:
The fact they are doing this now means they think prices are going higher and will stay that way. this is a way to maximize profits it won't reduce prices in any way.

Sent from my Pixel 5 using Tapatalk
Click to expand...
I think its the other way around, They see fossil fuels as a 'setting sun' industry with demand curtailing over time. Having a large reserve 50 years from now is like holding earth made diamionds.

UAE is restricted by OPEC on volumes. They have the lowest extraction prices in the world, in a lot of places it just gushes. They make more by selling more, price is really no consequence to them as they have enormous capacity to increase volumes, with a low cost base they can increase profits by simply increasing volume.

Think of it this way, you have a spring on your Puslinch estate that can flow 1m bottles of water a day. The water cartel says you can only sell 1000 bottles a day, and fixes your price at 10 cents. You opt out and produce 10,000 bottles a day, but you have to discount prices to 8 cents. The cartel then has to match your price to keep their share, so now you have to reduce to 5 cents. At that point the cartel can't match your price due to cost. You made $99/day with the cartel, you make $4950/day without them.

That's their economic model.
 
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