Editorial: Thanksgiving 2015 - Celebration & Flagellation In The Oil Markets
"Thanksgiving has wings and goes where it must go. Your prayer knows much more about it than you do." Victor Marie Hugo (1802 – 1885)
As the United States gears up to wind down for its Fall break, in the heart of Central Europe, the heat is rising. In two days time, the countries responsible for 40 per cent of the world’s oil supply will meet in Vienna and decide whether or not to rein in production or proceed at current levels.
In October 2014, the constituent states of the Organisation of the Petroleum Exporting Countries (OPEC) pumped 30.3 million barrels per day into the global markets - a reduction of some 300,000 barrels on the preceding month’s total. Although it has been mooted that OPEC will come together and agree on a minor curtailment in output this Thursday, that is supposition rather than certainty.
A ramp down would certainly help to allay the fears of the poorer OPEC nations – Angola, Ecuador and Venezuela – whose combined GDPs represent less than half of that of the cabal’s biggest player, Saudi Arabia.
The biggest loses in the maintenance of the production status quo would be felt by a fellow OPEC member and the largest non-OPEC hydrocarbons producer, nanely The Islamic Republic of Iran and The Russian Federation.
Sanctions meted out over Iran’s nuclear programme have led to the Western Asian state bearing the brunt of a 40 per cent slump in oil sales since 2011, and analysts have projected that the 77 million-strong nation needs oil at $140 to make ends meet at current spending levels.
Almost 2,500 kilometres north and west of Tehran, Moscow is preparing to kowtow to the oil cartel. Similarly sanction-afflicted due to alleged involvement in Ukraine’s civil unrest, the combination of punitive fiscal measures and a lower oil price may cost the oil-dependent nation up $12 billion per month in lost revenue. That is the equivalent of 7 per cent of the country’s GDP in an economy where the budget deficit is already running at 2.7 per cent and the national currency is worth 19 per cent less against the dollar than 10 months ago.
The 27th November will be a day of festivity for many, for others it will be much more about the solicitation of prayers and the hope they are answered....
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