http://www.ferret.com.au/articles/in-focus/opec-v-oil-prices-how-the-worlds-biggest-oil-cartel-lost-its-power-n2519536



[size=18pt]OPEC v oil prices: how the world's biggest oil cartel lost its power

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By Jemma Green & Mark Andrich 04 December 2014

Editorial


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With oil prices on the slide, members of the once-dominant Organization of the Petroleum Exporting Countries (OPEC) decided last week not to attempt to rally them by cutting production, leaving the Brent Crude price hovering at about US$70 (A$83) per barrel.

A curious decision, perhaps, by a 12-nation bloc that has previously kept an iron grip on the world’s oil trade. But not so curious when you consider that OPEC is no longer an all-powerful cartel – now it has plenty of competition.

For the first time since its formation in 1960, two of the top three oil-producing countries (the United States and Russia) are outside OPEC. While OPEC controls low-cost oil, it has lost supply control at higher prices and cannot push prices up like it could in the 1970s – or at least, not without stimulating a lot more supply from elsewhere.

Read more at http://www.ferret.com.au/articles/in-focus/opec-v-oil-prices-how-the-worlds-biggest-oil-cartel-lost-its-power-n2519536#BJO28tBISp8Y30pC.99

[size=18pt]Opec leader vows not to cut oil output even if price hits $20[/size]


Opec will not cut production even if the price of oil falls to $20 a barrel, the cartel’s de facto leader said, spelling out a dramatic policy shift that will have far-reaching implications for the global energy industry.

In an unusually frank interview, Ali al-Naimi, the Saudi oil minister, tore up Opec’s traditional strategy of keeping prices high by limiting oil output and replaced it with a new policy of defending the cartel’s market share at all costs.

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“It is not in the interest of Opec producers to cut their production, whatever the price is,” he told the Middle East Economic Survey. “Whether it goes down to $20, $40, $50, $60, it is irrelevant.”

He said the world may never see $100 a barrel oil again.

The comments, from a man who is often described as the most influential figure in the energy industry, marked the first time that Mr Naimi has explained the strategy shift in detail.

They represent a “fundamental change” in Opec policy that is more far-reaching than any seen since the 1970s, said Jamie Webster, oil analyst at IHS Energy.


“We have entered a scary time for the oil market and for the next several years we are going to be dealing with a lot of volatility,” he said. “Just about everything will be touched by this.”


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This is why we say Buhari is stuck in his old ways in the 1970s and not in tune with current affairs

The era of OPEC domination over the global energy market is over, the former head of the oil cartel has told Sky News.


Abdullah bin Hamad al-Attiyah, the former energy minister of Qatar, said that the group of 12 oil exporters, which dominated the production and price-setting of energy for half a century, had surrendered its power to single-handedly affect prices.

He urged the organisation to collaborate with Russia and reduce global oil production.

Asked whether the era of OPEC dominance was finished, he said: "It's over. OPEC cannot play alone. This is why when OPEC met at the last moment they cannot decide it because if they will cut there is no meaning it will be the others who will benefit and even increase their production."

His comments, in an exclusive Sky News interview, come after the oil price fell sharply, from $115 a barrel earlier this year to below $60 last week.

http://news.sky.com/story/1395975/opecs-dominance-of-energy-market-is-over