UAE orders non-OPEC producers to “act rationally” and stop producing oil. U.S. is lucky to have such good friends.
WASHINGTON, January 7, 2015 – In an almost laughably transparent statement Wednesday, United Arab Emirates (UAE) oil minister Suhail bin Mohammed al-Mazrouei told local newspaper The National that oil prices could recover if non-OPEC producers (read “the U.S.A.”) were to “act rationally.”
In other words, if the U.S. shuts down its shale oil bonanza, OPEC can get back to charging extortionate rates for its oil, Americans can pay $4.00 per gallon at the pump, and religiously conservative sheiks can restore full funding to Al Qaeda and ISIS. Isn’t it swell to have such great friends in the Middle East.
Actually, both the Saudis and the Emirates are acting rationally in a business sense. Why decrease the endless amount of international currency flowing into these desert nations by allowing price-busting supply competition for their only saleable commodity? Who doesn’t enjoy a monopoly, after all?
“Depending on the actual production growth from non-OPEC countries,” al Mazrouei continued, “this problem could take months or years.” Assuming the U.S. learns to behave itself, perhaps “we can see positive corrections during 2015,” he hinted broadly, even threatening that the UAE might boost its output capacity in the near future.
In an even more hilarious statement, Reuters quotes the UAE spokesman as claiming the November OPEC decision to leave current production quotas untouched “was supported by all members including the UAE and we are confident on the strategic nature of such a decision,” he said, obviously neglecting to remember Venezuela’s and Iran’s strenuous objection to that course of action.
“OPEC was not part of the oversupply and shall not be blamed if other non-OPEC countries oversupply the market,” he noted in an equally ludicrous observation that does, however, serve the useful purpose of confirming the real reasoning behind contributing to the oil glut. After nearly fifty years of unilaterally setting world prices for oil, the Arabian peninsula’s malefactors of great wealth still have no intention of sharing.
The Obama Administration could strike back by dropping its foolish opposition to the Keystone pipeline and, additionally, by allowing the U.S. to export its own surplus oil, thus directly competing with the sheiks for their business. But that would only encourage exploration for fossil fuels, which, in turn, would piss off the enviro-idiots who currently control the Administration’s entire agenda.
Better to let the sheiks have their way. The Maven is at the point, these days, where he doesn’t even recognize his own country any more.
On other fronts, Wall Street has apparently chosen to ignore this latest international provocation, instead deciding to look at the latest (and usually misleading) positive employment numbers reported by ADP. The Dow was up around 150 points as of 10:45 a.m. EST, with the S&P 500 up a nifty 18+ points and the tech-heavy NASDAQ up an impressive 43.3.
This market remains just too crazy this week for the Maven to get enthusiastic about either buying or selling, although big pharmas like Pfizer (PFE) and particularly Merck (MRK) have been happy places to park money this week.
There’s big money to be made in the grossly oversold major oil companies, that’s for sure. But maybe not yet.
At some point, oil’s bargain-basement prices will either fire up hitherto moribund sectors of the economy, like home construction. Or the smug sheiks will eventually get tired of giving away for free the only product their desert nations have to offer. But for now, until either or both economic events transpire, investing in the oil patch is a risk that only the well-heeled and well-hedged 1%-ers can take.
We’ll likely take a pass on any new investments today, given that morning buying is usually wasted when big sellers come in to scalp said buyers later in the afternoon. When this plays out, we’ll be back. But not until.Click here for reuse options!
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