jacky | December 21, 2008 | 8:56 pm
OPEC was founded on September 14, 1960 by Iran, Iraq, Saudi Arabia, Kuwait and Venezuela. The goal is the establishment of OPEC to set world oil prices and allocation of production of each member. In other words, short-term goal of this organization is how to transfer income from the oil companies to each country’s oil producers. Meanwhile, the OPEC has a long-term goal to achieve and maintain monopoly power in the international oil market.
In the process, the organization has a big role in controlling the price level and the development of the world oil market. This is seen how the organization is the “First Oil Crisis” caused by the embargo made by Saudi Arabia that creating a supply of oil decreased while the demand for oil increased more than twofold. In addition, the shock from the supply side is also caused by the Iranian revolution in 1978 until 1979. To avoid the oil crisis, OPEC tried to increase international tax reference price, the price level that is determined by the oil companies. Thus, OPEC can do monopoly in world markets.
Various factors that affect the fluctuation of oil prices in world markets to give our interpretation that the oil price fluctuation is caused by political factors that occurred in the country’s oil producers compared with the economic factors. However, some energy economists try to rebut the argument and said that the price fluctuation in world oil market is also caused by economic factors.
The establishment of basic World Oil Price
Determination of the level of world oil prices by OPEC influenced by the following factors:
• Inventories of oil producers in each country.
• A Trade
• Economy refinery
• Psychological and political factor (factor is more happening in the Middle East).
• Meanwhile, world crude oil prices will be influenced by factors:
• The composition of hydrocarbons contained in the oil
• The weight of the expressed in degrees API (American Petroleum Institute)
• The content of sulfur contained in the oil
The price system used by OPEC before the 1973 system is the fix, where the organization is determining the amount of oil price level that will be traded in international markets. However, in line with the development of the regional market and the market structure that is competitive, the system used by OPEC is no longer effective to run. Furthermore, price is no longer determined by OPEC but by each country in accordance with the basic determination that is used. Basics used by producers in the country determine the price level is as follows:
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jacky | November 21, 2008 | 4:53 pm
After made new record high $147 USD /barrel in July 2008, oil price has been declined more than 100 percent. Premium price is lowest in last 3 months in America after cut 53 cent. Oil price is predicted will go down below $40 USD/barrel as Global Financial Crisis result. Oil shipping contract in New York Mercantile Exchange show the opposite after run high after closed in $49.93 USD/barrel higher than before $48.25 USD/barrel.
In Asia, Oil price has no power also. January shipping for light sweet oil is closed at $48.47/barrel, or declined 95 cent yesterday afternoon in Singapore. Merchant claims and scare about Global recession because demand for energy is running low.
December Shipping, Oil price goes rise to level $49.62 after sit lowest price since 18 may 2005, $48.50 USD/barrel. As we know, Oil price declined to fantastic price after running record high (upper $100USD/barrel). United State Government has cut premium price to follow the lowering on oil crude price. Analysts then said to predict that Oil price contract shipping will go down below $40 USD/barrel.
Fantastic declining as resulted of Global crisis where demand from business (read Industry) declined in high percentage. To anticipate over supply (over supply has positive correlation to reduce oil price), OPEC might decide to cut their oil crude quota in near. Last month, OPEC had cut their supply with declined their quota to 1.5 million barrel/day. When OPEC start to cut their supply? Analysts predict OPEC will do it in December next month. So far, OPEC supplies 40 percent of total Global demand and to make OPEC as important rule in pricing manipulated.
OPEC tries to prevent the worst price
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jacky | May 17, 2008 | 2:44 am
When the plan was decided, university students and citizens had been demonstrating against the plan. The plan was cutting the subsidy on oil price so Gas Price (gas, premium ect) will be sold up to 30 percent when before. The policy will active in near. According to government staff the new oil price will available on 23 may next year!Government excuses that Indonesian must accept the fact, government can’t stay longer while the oil price attacks their budget.
Demonstrations against the policy were happened in many places in Indonesia, Students in Makasar had been demonstration since 2 weeks ago. Others students in Java also turn to road, to shout their disagree opinion against the policy. Wife houses also objective about the policy; they was said, increasing the oil price make their budget consumption is lower (Purchasing Power Parity is lower), and the also scare with the fired from company because the companies is also attacked by high in Cost so fired are potentially happened to their husbands. Read more »
jacky | April 22, 2008 | 5:16 pm
Today, oil makes its new record again. Oil runs to $120 per barrel. The main factors behind the new record are USD weak against Euro and Sabotage in Nigeria. If we look back, when governments worried when Oil ran close to $100 per barrel then $108 per barrel, some day before $112 per barrel and $118 per barrel, and hold at $120 per barrel today.
Some week ago, we got good news from Brasilia that they have found the new oil mine. The new oil mine can supply more then 20 percent of OPEC supply. The new made oil price declined to $112 per barrel. Now bad news comes.
Why oil price is too sensitive? When Oil Price was running high and high, the factors didn’t come from the supply, but Stock Exchange did. Investor took profit; Dollar was declined against Euro and some major currencies.
Why Dollar is too sensitive to make Oil Price fluctuating? Why we still use Dollar as Oil Price? Why not Euro or Japan Yen?
The question had been asked to my lecture in university. Why we still use Dollar as the measurement of Oil Price? I said. Actually I didn’t get best answer from him? I read the television; some analysts said that the main factor why we still use USD as Oil Price is because Dollar is transparent and more fluctuating currency if we combined with others. Read more »
