A New Oil Cartel

By: Jon Babyak / July 6, 2018

India and China are currently discussing forming an Oil Buyer’s Club to counter the market power of OPEC.  OPEC currently exists to stabilize the price of oil and reduce volatility, by either artificially raising the price of crude, or opening up their spigots and driving prices back down when competition starts to gain momentum.  India and China are also trying to gain support from Japan and Europe to further strengthen their counter-OPEC position. 

Saudi Arabian Oil

One of the goals of the new Oil Buyer’s Club would be to leverage a future dominated by electricity.  India and China, especially with the support of Japan and Europe, could influence a faster move to electricity, or they could work with OPEC to make a more gradual change to electricity if both sides can agree on moderate oil prices.  India, China, Japan and Europe account for nearly 2/3 of manufactured cars in the world, so they would be able to negotiate and influence the adoption speed of electric vehicles, further damaging OPEC’s influence in global markets. 

 

The new Oil Buyer’s Club, with its large share of oil consumers and auto manufacturers, has the potential to push back on OPEC’s market power.  Time will tell if this alliance grows into a true counter-cartel to OPEC, but there could be enormous geopolitical, economic and climate impacts.

 

https://oilprice.com/Energy/Crude-Oil/The-New-Oil-Cartel-Threatening-OPEC.html

https://www.bloomberg.com/view/articles/2018-07-02/oil-importing-countries-need-a-counter-cartel-to-take-on-opec

https://www.theguardian.com/business/2015/apr/08/saudi-arabia-boosts-crude-oil-production-to-highest-level-on-record


Categories: OPEC


Written by

Jon Babyak


Guttman Energy Daily Market Update Disclaimer – The information contained in this market update is derived from sources believed to be reliable; however this update could include technical inaccuracies or typographical errors and Guttman Energy does not guarantee the accuracy, completeness or reliability of this update. FURTHERMORE, THIS UPDATE IS PROVIDED "AS IS," WHERE IS, WITH ALL FAULTS AND WITHOUT ANY WARRANTY OR CONDITION OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY. GUTTMAN ENERGY ALSO SPECIFICALLY DISCLAIMS ALL EXPRESS AND IMPLIED WARRANTIES. YOU USE THIS UPDATE AT YOUR SOLE RISK. This update and any view or comment expressed herein are provided for informational purposes only and should not be interpreted in any way as recommendation or inducement to buy or sell products, commodity futures or options contracts.


Comments

Subscribe to our blog

Price Feed

Stay up-to-date on current fuel prices and market trends with our NYMEX price feed (15 minute delay to the live market).

© 2018 Market data provided and hosted by Barchart Market Data Solutions. Fundamental company data provided by Morningstar and Zacks Investment Research. Information is provided 'as-is' and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see disclaimer.

Categories

Contact Us