28.11.2012 - Three dilemmas awaiting OPEC in the future
OPEC faces a triple dilemma over the short, medium and long term, none of which have good outcomes for the cartel. The short term is simple; prices are likely to correct into 2013 below price bands that are deemed economically and politically comfortable. That strikes on OPEC’s medium term problem; the geological cost of production is now structurally out of sync with the geopolitical cost of survival. When OPEC doesn’t get the petrodollars they need to appease restive populations, the default position will be tough political repression to tighten their grip on power. Whether that ‘works’ as an effective coping mechanism remains to be seen; political outages might well help to lift interim prices, but this merely highlights OPEC’s long term nadir...............................................Full Article: Source
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