A Cold War on a Hot Day!
The worst meeting OPEC ever had may prove to best meeting for the global economy. OPEC came apart at the seams and a new cold war within the cartel spells a new era of insignificance for the players where greed and corruption is normally encouraged. Some may believe this is just about oil but to think that, you really miss the underlying significance of this meeting breakdown. This goes beyond oil and production but is another branch of the Arab spring and the leaders that are trying to assert their power and control over their people. This is about the uprisings in North Africa and the Middle East. This is about the war in Libya. This is about the Saudi intervention in Bahrain but most of all this is an end of an era. Perhaps the end of the most successful era where OPEC went from being a joke to a global economic powerhouse back to being a joke.
The golden age of OPEC was really born back in 1999 when oil price plunged to an adjusted for inflation near all time low. The cheating cartel realized that if they did not band tighter and actually cut production they would all drown in a sea of oil. The markets had no respect for those merry band of conspirators but a change of heart from perpetual OPEC quota busters Venezuela and the Saudi's and the Iranians' burying the hatchet so to speak help set the stage for the biggest run in oil prices that the world has ever seen. The cartel was led out of the abyss in part because they were forced to get along but also because of the intelligent leadership of Ai Naimi who I gave the name "the Allan Greenspan of Oil" not to mention an industrial revolution in China that was built on plunging commodity prices and some capitalistic market reforms. Under Naimi's wise leadership, he transformed OPEC into a central bank of oil treating a barrel like a currency using it to either prop up price or temper price. Of course he was trying to put lipstick on the OPEC pig because at the end of the day, this was a greedy, driven marriage of convenience to try to manipulate the price of oil at the expense of the global economy to line their own pockets, keep their regimes in power and keep their economies solely dependent on oil so they could centralize control and become even more powerful.
Yet now this détente has come crashing down amid threats to government power and religious sect divisions and greed and hatred. Iran is desperately trying to establish itself as the major power in the region and wants to stand up to the real leaders of the OPEC cartel, Saudi Arabia. The Iranians are still incensed that Saudi Arabia came to the rescue of the Sunni led Bahrain government during a mainly Shiite uprising. The Iranians saw it as an opportunity to expand their influence through the region. While the Iranians of course were outraged at the Saudi meddling, as for their part, they have no qualms in slaughtering their own people and meddling in Syrian politics and supporting terror in Iraq.
Some of the other buffoons that went along with this Iranian led OPEC showdown like Venezuela, Algeria, Angola, and Libya are also jealous that the Saudis can buy the love of their people with ample oil supply while they cannot. These shortsighted greedy countries need a higher price to cover their misdeeds and have oil production envy from their Saudi leadership. Even in today's New York Times headlines, "In Saudi Arabia, Royal Funds Buy Peace for Now." Iran can't buy peace with gasoline shortages and you have got to believe with the rising costs of metals, bullets are getting more expensive as well. Add to that the pathetic economies of Algeria and Angola there is an element of, “Hey we want to matter as well.”