Teutonic Knight

OPEC: Too Little, Too Late

I agree with the author that the foreign oil producers are in trouble and they are behind the curve in realizing their precarious situation.

Just common sense observation. When oil was trading around $140/barrel a few months ago, and now around $30-40/barrel, the effect would be devastating akin to an American household that suddenly finds its monthly take home check cut from $1400/month to $35/month. Worse still, the pain would be felt greater if that household had adopted a spending habit predicated on a $140/month paycheck.

To make matter even worse, and the pain greater, many of the oil exporting countries' economies are not diversified and oil is the single most important income. Note that oil cannot be easily and readily massively stockpiled and are traded on a daily basis in the open market. It boils down the how long and how severe this Recession/Depression is going to go. Cutting production also cuts income.

It is interesting to see how this round is going to play out in the next two to three years.