Stocks are tumbling as oil once again shoots back above $115. But it’s still not expensive enough for Venezuela.
According to energy minister Rafael Ramirez, Venezuela will propose an oil production cut at the next OPEC meeting in September if prices fall further (Reuters):
“What we cannot permit is a collapse in the price of oil.”
He said OPEC should avoid allowing undue increases in oil inventory levels. He said these levels are currently “good.”
Ramirez laid the blame for record oil prices on speculators. Venezuela’s assumption is that once the fundamentals of supply and demand take hold once again (whenever that is), the price of oil will return to more reasonable levels. Therefore, they believe increases in supply could send oil prices unnecessarily low.
We’re not sure the other OPEC countries agree with Venezuela. Iran has already tried to talk down oil prices and Saudi Arabia has made promises about increased oil production they may not even be able to keep. The higher oil goes today, the sooner there will be alternatives. Unlike Venezuela, most other oil-rich nations are willing to sacrifice a little cash now for the solace their customers will still want oil later.
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