Oil Production and Tanker Rates

The preceding article is oddly comforting. Its highly unlikely that the system supporting the oil supply/demand dynamic will change radically in the near term because the regimes of the OPEC 10 all rely on the stability of the income to maintain their regimes. Yes the dynamic of increased Russian production and the political turmoil we now face does impact the equation, but the fact that most of the region; while a portion of the populace resents the cultural implications of such and is on this tyrannical tact today; is better off maintaining this economic relationship with the West, not going to war over it.

The target range for the OPEC basket, now about $22-27/bbl, has little or nothing to do with optimizing profit and a lot to do with poli-economic survival. If the price drops too low, services for the populace of the producer states suffer and coups become a distinct possibility; too high and the consumer nations will activate their idle wells, of which there are plenty, then seek alternative sources and finally work even harder on alternative fuels.

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