Jack Yetiv

The Crude Oil Price Disconnect

I continue to be amazed by articles that speak on this issue and yet fail to realize that "bubbles" occur in many (maybe even all) "commodities" when neither the demand nor the supply is artificially controlled. For example, we get "housing" bubbles.

But oil is simply NOT such a commodity. OPEC accounts for 40% of global oil production, and they have shown great ability to cooperate of late in controlling demand. Saudi Arabia has made it clear that it is VERY happy with oil at $120, and nobody--including floor trader Mr. Dicker--can possibly argue that Saudi Arabia ALONE can FULLY control the price of oil, regardless of what Mr. Dicker or the author think the demand is.

What would happen to oil price if SA decided to decrease its production from 10 million b/d to 9 million? 8 million?

And that's our "friend" Saudi Arabia.

What about Iran's Ahmadinejad? Venezuela's Chavez?

Jack Yetiv