The age of deleveraging has finally hit the the Oil Empire of OPEC. Essentially, OPEC has gone through a defacto collapse of its ability to control prices. The great inflationary run up of the 1970's has created a situation where demand was greater than supply; and now supply is greater than demand in 2014. The worst case scenario is a barrel at $40.00 and the best best scenario is at
$60.00 a barrel. This is now creating secondary collapse in the equity industry by devaluating the oil inventories and creating lower stock prices to all oil industry related stocks. The third level of collapse is the credit markets and the lost of credit rating by major companies. The fourth level is the collapse of individual companies which will result in mergers, acquistions and bankrupt oil companies. The fifth level of collapse is political instability to OPEC countries with further geo-political problems with these companies. The sixth level of collapse is OPEC financing and borrowing capacity on all of its projects that will create massive unemployment, poverty, and half-completed industry projects.The seventh level of collapse is the changing of the government and its leadership in these key OPEC countries which will demand more social and political reforms. The 8th level of collapse is the massive withdrawl of funds from international banks, European Banks, and American banks. Numerous re-capitalization projects will result in OPEC cashing in their treasury bonds and treasury notes in the hundred of millions of dollars. The 9th level of collapse is the replacement of oil reserves by the US dollars as the money reserve of final resort. The deflationary forces are creating dropping prices, and large amounts of capital that is not being used by the business and consumer markets. OPEC spending spree has come to an abrupt end and will end up being OPEC 3 in 6 years until 2020. The 6 years will seem like 20 years to the OPEC countries.
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