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 | December 20, 2008 | 12:12 pm
The price of crude oil plunged on Friday, local time, after a bailout plan for the automotive industry so that the U.S. failed to heighten concern about slowing down on demand due to the global financial crisis bites. As reported by AFP, light sweet crude oil for January delivery fell 1.70 U.S. dollars to be closed at 46.28 U.S. dollars per barrel on the New York Mercantile Exchange. In the Intercontinental Exchange, London, Brent crude North Sea for January delivery plunged 98 cents on a steady 46.41 U.S. dollars per barrel.
Oil price rebound has been more than 10 percent on Thursday, amid signals that OPEC and Russia will cooperate next week in the reduction of production to support the increase of oil prices plunged. “At first, the price of commodities including oil to rally, but then forced by crisis of confidence in the middle of the failure of the U.S. automotive bailout plan,” said analyst John Kilduff of MF Global.
A bailout plan by 14 billion U.S. dollars to save the U.S. automotive industry is sick, failed in the U.S. Senate on Thursday, increasing the prospect bankruptcy General Motors and Chrysler, which have millions of workers. The burden of this global stock market Friday, and press the switch commodity prices.
“Crude Oil to be the decrease in the stock market on Friday,” said Nimit wine, a broker Sucden Analyst Company. “Reluctance to take risks created the automotive industry bailout after the failure.”
The State Oil Organization (OPEC) is estimated to announce the cutting of production at a meeting next Wednesday in an effort to encourage the increase of prices that have fallen from new record high above 147 U.S. dollars in July. OPEC, which produces 40 percent crude oil world, has been called producer countries of non-OPEC oil to participate in reducing production to keep oil prices decline sharply. Russia on Thursday is ready to join with OPEC to keep crude oil prices fall and will become part of the oil cartel if Moscow became interested members. Russian non-OPEC members, but ranked equal with Saudi Arabia, de facto cartel leaders, as the world’s largest oil exporter.
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jacky | April 29, 2008 | 1:32 am
Oil Supply is running low, We must to think about it!
China’s resurrection has been establishing since ten years ago. Now, China woke up as a new wild tiger and tries to eat all his victims. China followed his neighbor Japan; imitate Japan strategies to be Modern Country, Top industry and Asia Leader in Economic, Asia Tigers.
Now, China’s products have been spread to all countries; America, Japan, European, Asia and Indonesia. The China Resurrection made all rich countries scare because China’s products are very competitive in pricing.
Besides making industrial countries scare, Rich Countries look China as a potential investment field. Japan has been changing his face to China. Japan declined his Investment in East Asia (ASEAN) and increases his money in China.
While many new industries move to China, demand on oil also increases. Without investment (foreign direct investment in china), demand on oil is still high because China has two billions people. 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 »
