Crude is retreating from its nominal all-time high today, but the scapegoating process for $90+ oil is in full swing. OPEC ministers know they're among the targets, and they're trying to get out of the way:
OPEC has no power over many of the factors buffeting oil markets and the group is worried by record high prices that are threatening the world economy and future demand growth, OPEC ministers said on Tuesday.
"Please don't blame us for $93 oil," Qatari Oil Minister Abdullah al-Attiyah told reporters on the fringes of an international energy conference [in London].
"The market is out of control."
OPEC President Mohammed bin Dhaen al-Hamli reiterated OPEC would always step in to meet supply shortfalls, but a 34 percent surge in the oil price since mid-August was driven by a flood of speculative investment and international political tensions.
"The market is increasingly driven by forces beyond OPEC's control, by geopolitical events and the growing influence of financial investors," said Hamli, who is also UAE oil minister.
"We are of course concerned about high oil prices."
"We will do what we can, mainly responding to changing demand fundamentals."
It's always those darn speculators. Or the ever-present "international political tensions."
Of course, the OPEC ministers are no more to blame than the traders or Mahmoud Ahmadinejad or Dick Cheney. I'm going to quote — in full — Outstanding Investments editor Byron King from his comments in yesterday's 5 Min. Forecast: They're that important.
“What is with the 50% price rise in less than one year? Is it just all about the U.S. and Iran talking smack at each other? At $92 per barrel, is every barrel of oil in the world really carrying a $30 ‘war risk’ premium?”
“The Energy Information Administration announced a drop of 5.3 million barrels of oil in inventory, versus market expectations for a 300,000 barrel increase. That is a 5.6 million barrel net difference, on the negative side. There is a severe oil shortage before the winter driving and heating season in the Northern Hemisphere.
“Compare this 5.6 million barrel shortfall with Iran’s total daily oil output of about 3.7 million barrels. Really, which is more important: the 5.6 million barrel supply shortfall or the tensions between the U.S. and Iran?”
Exactly. But OPEC ministers can't talk about supply shortfalls, expect to mouth platitudes about how they'll always "step in" to meet short-term disruptions. Long-term declines in production… That's another matter. You won't hear them address (and clueless reporters don't know to ask) why the all-time high in world oil production came in July of last year and hasn't been exceeded since then, even though prices are substantially higher and there's a greater incentive to produce.
It's almost like a conspiracy of silence. Or more likely, a collective act of denial.