Oil price rises sharply after Opec meeting collapses in disarray

• Proposal to increase production rejected by 6 of 12 members
• Analysts foresee Opec's power base weakening

Gas prices rising wikimedia image

Terry Macalister and Heather Stewart
Guardian

Hopes that Opec would bring relief to motorists and wider western economies from soaring energy prices were today dashed when a crunch meeting of the oil cartel broke up in disarray without the expected agreement to increase crude output.

Political turbulence in North Africa and the Middle East undermined the usual consensus at the meeting in Vienna and led to speculation that new internal rivalries could split the group, leading to even more market chaos.

Saudi Arabia, the world's largest oil producer and influential Opec dove, was outmanoeuvred by Iran, Venezuela, Libya and others, later describing the summit as "one of the worst meetings we have ever had".

The price of Brent crude soared a further $1.65 to $118.43 a barrel as an expected Opec agreement to raise its production quotas by about 1.5 million barrels a day failed to materialise.

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Exxon CEO Estimates Oil Should Cost $60-70 Per Barrel (Video)

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Obama announces new oil drilling

Editor's Note:  Problem, Reaction, Solution.  The best way to get people to allow the criminal oil companies to start drilling in the Gulf again, without any significant safety improvements, is to hit them where it hurts.

Obama has previously vowed to cut US oil imports
© AFP/File Mira Oberman

AFP

WASHINGTON (AFP) - President Barack Obama, under pressure over high gasoline prices, Saturday committed to annual oil and gas lease sales in Alaska's National Petroleum Reserve and to speeding up production in other areas.

In his weekly radio and Internet address, the US leader admitted that one of the biggest burdens for US consumers in recent months had been the high price of gasoline -- which is more than four dollars a gallon in some areas.

"These spikes in gas prices are often temporary, and while there are no quick fixes to the problem, there are a few steps we should take that make good sense," Obama said.

The president vowed to increase safe and responsible oil production from US resources, at the same time as enhancing safety and environmental standards.

The Roller Coaster Ride of Oil Continues

Dees Illustration

Greg Hunter
USA Watchdog

Gas prices 2011! Oil prices are on the rise.  The price per barrel rose again yesterday, and so did gas prices.  According to AAA, the national average price of unleaded gasoline added a penny, climbing to $3.879 per gallon.  It is already more than $4.00 a gallon on the east and west coast, and don’t expect the price to go down before it goes way up.James Howard Kunstler has researched and written books on fictional depictions of the post-oil American future.   Kunstler forecasts very tight oil supplies, with dreadful consequences for our society.   In his latest article, Kunstler takes the President to task for blaming the recent price spike on “speculators,” while turning a blind eye to the crooked bankers who brought down the world economy in 2008.  Please enjoy this excellent post.  –Greg Hunter–

“The Banana Peel of Destiny”
By James Howard Kunstler

That was a cute move by President Obama last week, calling out the “oil speculators” with a memo to his Attorney General, Eric Holder.  The President proved a few weeks ago, in his energy speech to the nation, that he doesn’t understand how these resources are produced and traded. Consequently, the people he addressed remain clueless, but ticked off nonetheless. And the logic of politics now compels Mr. Obama to call out the dogs on…people who make money trading paper claims on oil?

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Oil Crisis Just Got Real: Sinopec (Read China) Cuts Off Oil Exports

Sinopec Station in Hong Kong
Wikimedia Commons image

Zero Hedge

As if a dollar in freefall was not enough, surging oil is about to hit the turbo boost, decimating what is left of the US (and global) consumer. Xinhua, via Energy Daily, brings this stunner:  "Chinese oil giant Sinopec has stopped exporting oil products to maintain domestic supplies amid disruption concerns caused by Middle East unrest and Japan’s earthquake, a report said Wednesday. The state-run Xinhua news agency did not say how long the suspension would last but it reported that the firm had said it also would take steps to step up output “to maintain domestic market supplies of refined oil products”. Oh but don’t worry, those good Saudi folks are seeing a massive drop in demand… for their Kool aid perhaps. “Sinopec would ensure supplies met  the “basic needs” of the southern Chinese special regions of Hong Kong and Macao, but they also should expect an unspecified drop in supply, Xinhua quoted an unnamed company official as saying.” Now… does anyone remember the 1970s?

The report said Sinopec has raised output of refined oil products this year, with its first-quarter production reaching 31.55 million tonnes, an increase of 6.2 percent from the same period last year. 

Sinopec last month said its 2010 net profit rose nearly 14 percent on higher oil prices and strong domestic demand for refined oil and chemical products. 

It reported a net profit of 71.8 billion yuan ($11 billion). 

The Beijing-based company attributed the result to China's rapid economic growth, robust oil demand and "the increase in the price of crude oil, oil products and petrochemical products."

Saudis Slash Oil Output; Say Market Oversupplied

OPEC Countries/Wikimedia image

CNBC/Reuters

Saudi Arabia's oil minister said on Sunday the kingdom had slashed output by 800,000 barrels per day in March due to oversupply, sending the strongest signal yet that OPEC will not act to quell soaring prices.

Consumers have urged the exporters' group to pump more crude to put a cap on oil, which surged to more than $127 a barrel this month, its highest level in 2 1/2 years amid unrest in North Africa and the Middle East.

Oil Ministers from Kuwait and the United Arab Emirates echoed Saudi Arabia's Ali al-Naimi's concerns about oversupply and said rocketing crude prices were out of the hands of OPEC, which next meets in June.

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Speculators, Cartels and Myths of Scarcity: How War Pushes up the Price of Oil

Oil Wars/Wikimedia image

Dean Henderson
Global Research

Last week, as if to justify his Libyan crusade, President Obama echoed the prevailing “peak oil” myth, stating that “we must accept the new reality that from here on out, demand for oil will always exceed supply”.  It was music to the ears of the Rockefeller/Rothschild energy cartel and tax-dodger oil traders in Zug, Switzerland alike.  Both know full well that oil companies pay around $18/barrel to get crude out of the ground.

Big Oil rings up its usual quarterly record profit, speculators led by Goldman Sachs and Morgan Stanley tack on another $50/barrel and people get gouged at the gas pump.  Governments “tighten their belts”, economies contract and the myth of scarcity (root word: scare) encourages a race to the bottom for the global masses, alongside an historical concentration of power and wealth by the well-fed and fueled global elite.

A day after Obama’s endorsement of concentrated corporate power and casino capitalism, the US Department of Energy reported that the main US oil stage depot at Cushing, Oklahoma was holding 41.9 million barrels of crude oil, very near its capacity of 44 million barrels.  In other words, the US is awash in crude oil.

Garden As If Your Life Depended On It, Because It Does

There are at least five reasons why more of us should take up the spade, make some compost, and start gardening with a vengeance.

Garden hen/Wikimedia Commons image

Ellen LaConte
AlterNet

Spring has sprung -- at least south of the northern tier of states where snow still has a ban on it -- and the grass has 'riz. And so has the price of most foods, which is particularly devastating just now when so many Americans are unemployed, underemployed, retired or retiring, on declining or fixed incomes and are having to choose between paying their mortgages, credit card bills, car payments, and medical and utility bills and eating enough and healthily. Many are eating more fast food, prepared foods, junk food -- all of which are also becoming more expensive -- or less food.

In some American towns, and not just impoverished backwaters, as many as 30 percent of residents can't afford to feed themselves and their families sufficiently, let alone nutritiously. Here in the Piedmont Triad of North Carolina where I live it's 25 percent. Across the country one out of six of the elderly suffers from malnutrition and hunger. And the number of children served one or two of their heartiest, healthiest meals by their schools grows annually as the number of them living at poverty levels tops 20 percent. Thirty-seven million Americans rely on food banks that now routinely sport half-empty shelves and report near-empty bank accounts. And this is a prosperous nation!

Oil rises sharply as West continues Libya assault

Oil rose sharply on Monday after continued air strikes on Colonel Gaddafi's military sites in Libya increased fears of a supply disruption.

AFP image

Garry White
Telegraph

Brent crude for May delivery leapt $2.21 to $116.14 by the afternoon as Gadaffi vowed to repel attacks from UN-mandated nations using missiles and warplanes against military installations.

The Libyan leader responded by saying: “We will not leave our oil to America or France or Britain or the enemy Christian states. We will fight for every inch of our land and liberate every inch of it.”

This suggested Libyan forces may sabotage crude installations, and some traders worry a cornered Gaddafi could lash out in a last stand that disrupts regional tanker shipments.

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World energy crunch as nuclear and oil both go wrong

The existential crisis for the world's nuclear industry could hardly have come at a worse moment. The epicentre of the world's oil supply is disturbingly close to its own systemic crisis as the Gulf erupts in conflict.

Anthony Freda Illustration

Ambrose Evans-Pritchard
Telegraph

Libya's civil war has cut global crude supply by 1.1m barrels per day (bpd), eroding Opec's spare capacity to a wafer-thin margin of 2m bpd, if Goldman Sachs is correct.

Now events in the Gulf have turned dangerous after Saudi Arabia sent troops into Bahrain to help the Sunni monarchy crush largely Shi'ite dissent, risking a showdown with Iran.

Russia's finance minister Alexei Kudrin warned on Wednesday that the confluence of events in Japan and the Mid-East could push oil to $200 a barrel in a "short-lived" spike, which would snuff out global recovery.

While there has been no loss of oil output in the Gulf so far, the violent crackdown in Manama on Wednesday left four people dead and risks inflaming the volatile geopolitics of the region. The rout of protesters encamped at the Pearl roundabout had echoes of China's Tiananmen massacre.

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Wholesale prices rise 1.6 pct. due to biggest jump in food costs in more than 36 years

Wikimedia Commons image

Yahoo/AP

WASHINGTON (AP) -- Wholesale prices jumped last month by the most in nearly two years due to higher energy costs and the steepest rise in food prices in 36 years. Excluding those volatile categories, inflation was tame.

The Labor Department said Wednesday that the Producer Price Index rose a seasonally adjusted 1.6 percent in February -- double the 0.8 percent rise in the previous month. Outside of food and energy costs, the core index ticked up 0.2 percent, less than January's 0.5 percent rise.

Food prices soared 3.9 percent last month, the biggest gain since November 1974. Most of that increase was due to a sharp rise in vegetable costs, which increased nearly 50 percent. That was the most in almost a year. Meat and dairy products also rose.

Energy prices rose 3.3 percent last month, led by a 3.7 percent increase in gasoline costs.

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RELATED ARTICLES:
5 Easy Ways to Prepare for Massive Food Inflation
7 Reasons Food Shortages will Become a Global Crisis

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US welcomes Arab League backing of no-fly zone

Arab League Secretary General Amr Mussa
© AFP Aris Messinis

AFP

WASHINGTON (AFP) - The United States welcomed Arab League support for a no-fly zone over Libya on Saturday, saying it signaled "unified" international pressure on Moamer Kadhafi's regime to halt the violence.

It stressed it would maintain its posture of support for the Libyan opposition, and that Washington was preparing for "all contingencies" in the North African nation where rebels have been battling regime forces for weeks.

"We welcome this important step by the Arab League, which strengthens the international pressure on Kadhafi and support for the Libyan people," White House spokesman Jay Carney said in a statement.

"The international community is unified in sending a clear message that the violence in Libya must stop, and that the Kadhafi regime must be held accountable."

After crisis talks in Cairo the Arab League urged the United Nations to slap a no-fly zone on Libya and said Kadhafi's regime had "lost legitimacy," in a boost for rebels fighting to unseat the strongman. Washington joined Britain in welcoming the 22-member League's support.


US President Barack Obama warned on Friday that the world is "tightening the noose" on Kadhafi, but admitted he is concerned the Libyan strongman's forces could thwart rebels battling to oust him.

"The United States will continue to advance our efforts to pressure Kadhafi, to support the Libyan opposition, and to prepare for all contingencies, in close coordination with our international partners," Carney said in his statement.

US posture on a no-fly zone over Libya has been far from unanimous.

Defense Secretary Robert Gates said Saturday that the US military and other allies could impose such a zone but it remains unclear if it would be a "wise" move.

"This is not a question of whether we or our allies can do this. We can do it," Gates told reporters aboard his plane after a visit to Bahrain.

"The question is whether it's a wise thing to do and that's the discussion that's going on at a political level," he said.



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US sanctions cripple Libyan oil exports

© AFP Marco Longari

AFP

NEW YORK (AFP) - US sanctions against Libya are crippling the country's oil exports as market participants fear being accused of financing the regime of leader Moamer Kadhafi, a person familiar with the situation said Tuesday.

"I talk to a lot of guys at some of the banks and a couple of oil companies and they are shut down in terms of Libya, essentially because they can't accept payments," the person told AFP.

"The Treasury Department have told them to shut down," he said. "It can ultimately end up halting all the exports, we are on track for that, because everybody is on board with these sanctions."

The International Energy Agency, the developed countries' watchdog, said Friday that Libya is now exporting between 500,000 and 600,000 barrels of crude oil a day, compared with a daily average of 1.3 million in 2010.

On February 25, US President Barack Obama imposed sanctions on Kadhafi, four members of his family, and Libyan government agencies over a brutal crackdown on anti-regime protesters.


Days later, the US Treasury announced it had frozen at least $32 billion in Libyan assets, calling it the largest blocking under any sanctions program in the country's history.

The sanctions targets include US companies' subsidiaries controlled by Libyan companies, such as US oil groups operating in the country under the control of the Libyan state oil company.

ConocoPhillips halted its exports, while Marathon Oil said it had stopped paying taxes and license fees to the Libyan government.

ExxonMobil, the biggest US oil firm, currently has no activities in Libya. In response to a question about whether it would stop crude oil purchases from Libya, replied in an email: "ExxonMobil is complying with the UN and US sanctions against the government of Libya."

Banks, which typically play an intermediary role in transactions, no longer want to be involved, further tying up the market.

According to The Wall Street Journal, Morgan Stanley, which buys oil in Libya for its clients, no longer does so due to the sanctions.

Contacted by AFP, the Wall Street investment bank declined to comment on the report.

The United Nations Security Council and the European Union have also imposed severe sanctions on the Kadhafi regime, notably freezing the financial assets of some of the top officials.

"Fewer and fewer companies are willing to deal with Libyan state entities such as the National Oil Corp., which at the moment controls Libya's crude and products marketing," said Samuel Ciszuk, a Mideast oil analyst at IHS Global Insight.

"International UN sanctions do not target Libyan crude exports per se, however, the unilateral US sanctions seem more harsh and have led to such an interpretation among some US companies," he said in a client note.

Ciszuk said that generally, international oil companies and traders seemed to be taking a safe approach, "having started to contain their dealings with Libya severely last week, as it was increasingly clear that the country was heading towards a civil war."

"With little, if any, crude now expected out of the North African country, there is little reason to keep relations open, given the potential relational damage from being caught paying money for crude into regime-controlled accounts."

On Saturday, the British newspaper Financial Times reported that despite the US, UN and EU sanctions "hundreds of millions of dollars" from oil exports continue to flow into Gadhafi's regime.

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White House considers tapping oil reserves

© AFP/File Philippe Huguen

AFP

WASHINGTON (AFP) - The United States has not ruled out tapping strategic oil reserves in the face of spiking oil prices, White House chief of staff William Daley said Sunday.

"Well, we're looking at the options. The issue of the reserves is one we're considering," Daley told NBC's "Meet the Press."

"There's a bunch of factors that have to be looked at. And it is just not the price," but also uncertainty stemming from unrest in the oil-rich Middle East and North Africa, he stressed.

Daley said President Barack Obama was "extremely concerned" about the rising price of oil and its impact on the struggling US economy.


The White House economic team has been working with international organizations to devise a coordinated response to oil prices, he said.

Friday's price for light sweet crude hit levels not seen since September 2008, closing at 104.42 dollars.

The price has jumped more than 21 percent over the last two weeks amid regional turmoil and increasing international demand.

On Thursday, Treasury Secretary Timothy Geithner said the reserves, paired with increased capacity around the world, could pump enough oil to limit price shocks.

"There is considerable spare oil production capacity globally, and we and other major economies possess substantial strategic reserves of oil," Geithner told Congress.

"If necessary, those reserves could be mobilized to help mitigate the effect of a severe, sustained supply disruption."

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Oil price shock; you ain't seen nothing yet

Wiki Commons

Jeremy Warner
Telegraph

The most common cause of a spiking oil price is supply shock. We may be seeing just such a phenonenon right now with the effective shut down of Libyan oil. But sometimes it’s excessive demand that does the damage.

Forget the present turbulence, which may or may not be temporary. You don’t have to look far into the future, perhaps as little as a year to 18 months, to see that a major demand challenge is looming which even assuming no further disruption to existing production, will challenge the present supply base to breaking point.

As it is, it’s fair to assume the world is closer to full capacity than producers care to admit. Rewind to the last oil price shock in the summer of 2008, and Saudi Arabia, pumping out oil at the rate of around 9.5 million barrels a day, was having to draw on inventories to meet demand. It’s therefore reasonable to assume that 9.5 million bpd then represented maximum capacity.

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'Gaddafi orders explosion of Libya's oil pipelines'

Libyan leader tells security forces to blow up oil facilities, reports Time; number of peoplekilled in protests rises to 300. 

Associated Press

The Jerusalem Post 

Libyan leader Muammar Gaddafi has ordered his security forces to sabotage oil facilities, Time magazine reported Wednesday, quoting a source close to Gaddafi.

According to the report, the forces were ordered to start blowing up oil pipelines in order to cut off flows to ports in the Mediterranean. 


"The sabotage, according to the insider, is meant to serve as a message to Libya's rebellious tribes: It's either me or chaos," said the report.

Time also reported that the insider said Gaddafi only has the support of about 5,000 soldiers in the army and that the Libyan leader has told people close to him that he realizes he cannot take control over Libya with the troops he has.

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RELATED ARTICLE:
The Pharaoh Will Fall, Oil Will Climb, and Wall Street Will Win

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The Pharaoh will Fall, Oil will Climb, and Wall Street will Win

Eric Blair
Activist Post

Yesterday, oil broke through the $100 mark for the first time since 2008 due to the populist uprising in Arab nations, indicating it's well on its way to new heights. Many financial insiders have predicted oil will go to $150 per barrel and beyond this year. But if $100/bbl was not odd enough given the stagnant (at best) economic environment, what could possibly make it jump another 50%?

The dollar won't drop that significantly over the next year, will it? If it does, calls to drop the petro-dollar as the reserve currency will likely turn to reality.  And surely the global economy is not expected to grow fast enough to warrant a 50% jump for the lifeblood of civilization. It seems clear that demand for oil will stay relatively flat, so only a catastrophic supply problem would justify these increases.

Enter the new supply problem.  A stunning wave of populist protests has swept through Egypt who control the ultra-important Suez Canal.  The Egyptian revolution is displaying powerful solidarity in their struggle to oust longtime autocrat Pharaoh, Hosni Mubarak, for corruption and economic suppression. And it's beginning to look as though Mubarak will eventually be forced out and new leadership will be throned to appease the masses.

However, the uprising is expanding, and is likely to spread deeper into the psyche of the eternally oppressed around the world.  The outcome of this tsunami of activism is uncertain, but stormy waves means it is surf's up for Wall Street.  The civil unrest gives them the perfect excuse to justify what can only be described as outright fraud and manipulation of the oil markets.


Bloomberg reported in 2009 that Citigroup, JP Morgan, and other "Traders" were leasing and buying oil tankers, parking them idle in the ocean, while simultaneously driving up oil futures through their brokerages.  In fact, it was actually difficult to get oil when it was cheap because of this hoarding.  Meanwhile, prices jumped from the low $40s to over $70 per barrel is just a few months.  The near doubling of prices in the summer of 2009 caused Senator Bernie Sanders (I-VT) to introduce legislation to crack down on oil speculation.

Sanders claimed that, "Despite the record supply of oil and reduced demand, prices are going up, not down."  And that because the storage of oil in overseas tankers goes unreported to the federal government, the practice has distorted supplies and led to unnecessarily high prices. Reuters reported:

"The last thing people need now is to be ripped off at the gas pump because speculators on Wall Street -- some of the same people who received the largest taxpayer bailout in U.S. history -- are allowed to jack up oil prices through price manipulation and outright fraud," he said (Sanders).

Sanders' legislation directs the Commodity Futures Trading Commission, which oversees futures markets like the New York Mercantile Exchange, "to stop sudden or unreasonable fluctuations or unwarranted changes in prices."

At the time, the Commissioner of the CFTC, Bart Chilton, agreed with Sanders, "I wholeheartedly agree with you that the time to act on these issues is now, and the CFTC should aggressively utilize all available authorities . . . to address these pressing issues."  Although the House overwhelmingly passed a similar bill in 2008, nothing has been done to date -- except of course that the price of oil has gone up 150% since 2009 lows.  Once again, the banks are benefiting from the misery of the masses.

In a recent interview, potential presidential candidate and iconic businessman Donald Trump said if the situation in Arab nations becomes catastrophic enough to break up OPEC's control of oil, he thinks the price would go down due to more open competition. Barring that, he predicts at least $150/bbl like many other analysts.  However, he was wrong to claim that OPEC sets the price of oil, as they just set output levels.  Trump's pals, the Wall Street manipulators, are who actually determines the price -- and he knows that.  Therefore, a break-up of OPEC is only likely to fuel further speculation.

Consequently, banks don't care about finding a quick resolution to the chaos in the Middle East, so long as they can find a way to profit from it. Yet, you can bet that whoever ends up running these unsettled nations will likely be a shill for the establishment like Egypt's protest leader and Globalist puppet, ElBaradei.

The situation in Egypt proves that there are forces at work far greater than governments; greater than genuine fundamentals for oil; and powerful enough to co-opt an unprecedented solidarity movement of a region -- they're called Banksters.

RECENTLY by Eric Blair:
Google Seeks to Weaken 'Content Farming' Websites

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