GWYNNE DYER: We could see the global price of gas drop dramatically - here's why |
Newfoundland & Labrador
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GWYNNE DYER: We could see the global price of gas drop dramatically - here's why
With the global demand for oil dropping, the United Arab Emirates has pulled out of OPEC, which has global implications
Eat your hearts out, Pablo Escobar, Joaquín “El Chapo” Guzmán and Nemesio “El Mencho” Oseguera Cervantes. The richest cartel by far is still the Organisation of Petroleum Exporting Countries (OPEC), and its leaders also get to die in bed.
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But one of its oldest members, the United Arab Emirates (UAE), has just quit. No notice, no explanations — just quit.
The UAE is the cartel’s third biggest producer, so this is going to have several major consequences. The first, which will happen as soon as the Strait of Hormuz is reopened, is that the price of oil will drop, possibly even below the pre-war price. (Brent oil was selling for about $65 a barrel one year ago; this week it reached $119 per bbl).
The whole purpose of a cartel is to keep the price of the product high by restricting the supply. That requires discipline by the producers, because some producers will benefit more than others if they........