Sunday April 17, 2016

I've Been Thinking:

OPEC is meeting today in Qatar. Iran has refused to attend the meeting. The reason is simple.

This OPEC meeting was called in an effort to bolster oil prices by limiting oil production to January levels. The hope is that by limiting production the price of oil will climb and stabilize near $50.

Iran has no intention of signing or agreeing to a reduction of oil.

The Iranians are finally pumping and making money. This money is essential to their renewal after the sanctions against them were lifted last year. They will not voluntarily cut their production and reduce their income - even for long term benefits. For Iran - the short term is essential.

Iranian Oil Minister Zangeneh explain the decision simply and directly: "We reached the conclusion that the Doha meeting is for those who want to sign the oil freeze plans, and if we wanted to have a representative at the meeting, it was to show our support of this project. But since Iran is not going to sign this, there is no need for the presence of Iran's representative at the meeting."

The Sunnis want to limit Iran's growth and renewal. It is not clear if there will be any disciplining of Iran by OPEC. A cartel is only effective if it can expect every member to comply.

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