opec engineering oi price collapse?

  1. 900 Posts.
    who sees a problem with this scenario.

    Present factors raising prices

    -Venezuala production well down taking 2.5-3 mbl out
    -Iraq Production down about 1mbl
    -War fears and assorted moslem terrorist jitters
    - Seasonal high demand period.

    Future factors that will lower prices

    -Venezuala's strike ends bringing back 2.5 - 3mbl + extra if they try to make up for lost production.
    -Iraq situation resolved increasing iraq production by 1mbl +
    -OPEC increases quotas by 1.5-2mbl
    -Rising non-OPEC production
    -Falling demand brought about by the present (high) price of oil
    -Falling world demand due to economic slowdown

    Therefore we could have increased production in the order of 6mbl + hitting the market during the usual low demand season for oil compounded by a cyclical drop in demand caused by a slowing world economy.

    Should the above occur we could be headed back to the same $10 pb price that was brought about by OPEC hiking quotas when the Asian economic crisis was taking place.

    Does anyone else have an opinion on this?
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