From the Department of Self-fulfilling Prophesies
OPEC president Chakib Khelil says that the price of oil will continue to go up even as demand continues to go down and more supplies are brought to market. One way or another, he says, it’s all the fault of the United States. AFP:
“The price of oil will rise again in the coming weeks. We have to follow the evolution of the dollar, because a one percent fall in the dollar means four dollars more on the price of oil…As producer countries we think that the current supply is sufficient, that this balance in supply is in everybody’s interests and that it shouldn’t be disturbed, because the current rise in oil prices is in nobody’s interest.”…
“I believe that 60 percent of the rise is due to the fall in the exchange rate of the dollar and to geopolitical problems, and 40 percent to the intrusion of bioethanol on the market…I can affirm that all the (OPEC) countries are in favour of new explorations (of oil reserves), but the fact is that the embargo imposed by Libya has prevented any increase of investment in that country, just as the current embargo on Iran is stopping anyone investing there…The United States is threatening severe economic sanctions against any group which dares invest in Iran. Similarly, the war in Iraq is why investment there is weak. No OPEC country can invest in embargoed countries.”
The oddness of OPEC president Chakib Khelil’s statement is perhaps best illustrated by his reference to biofuels, which might raise the price of foodstuffs, but not logically or significantly the price of oil, since they an alternative source of energy supply. As we have said, we continue to believe that there is a high likelihood that any number of OPEC nations are active participants in the oil futures markets and make statements designed to keep those profits going. Indeed, some are arguably making more money from hyping their own financial bets than from oil production itself.