OPEC In Transition to Somewhere

OPEC is going through some kind of maturation process, or perhaps a winter of discontent, or some other metaphor for a phase of life that will probably take it to a new level of (dis)organization.  OPEC can’t agree on whether to change production quotas. History has shown that such disagreements tempt one member country to go it alone and raise production while prices remain high, in a mad dash for a revenue spike.  That won’t sit well with countries whose supergiant fields are maturing (Saudi Arabia, Mexico) and not amenable to production boosts without years of new investment.

Meanwhile, there’s life left in supposedly mature North American petroleum production.  Exxon Mobil (XOM) has found plenty of oil in the Gulf of Mexico. Heads up, BOEMRE, you’ll have to speed up those GOM permits if the Administration is to make good on its promise to keep the U.S. out of recession.  Maybe the U.S. could join OPEC as the new swing producer if it keeps up the pace of offshore discoveries.

The death of OPEC has been predicted for decades.  Those wily producers always manage to surprise the world with their longevity.  The only thing that can hurt the bloc is a permanent decline in oil production.  That isn’t on the scene just yet.

About Anthony Alfidi 128 Articles

Affiliation: Alfidi Capital LLC

Anthony Alfidi is the Founder and CEO of Alfidi Capital. His firm publishes free investment research with honesty and humor.

Mr. Alfidi holds a Bachelor's degree in human resource management from the University of Notre Dame (cum laude) and an MBA in finance from the University of San Francisco. He is a life member of Beta Gamma Sigma, the academic honor society for business majors. He has been a private investor since the 1990s.

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