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Really hard to say now.  Used to be a lack of cohesion in OPEC could drop prices 50% in a very short period of time.  Now with Nigeria unable to control their angry population in the oil areas (production down 20+%), Indo an importer, Venz still not recovering from their civil strife (production down), Russia back in growth mode leaving less for export in the longer term, Mexico in decline etc etc, price is really up to Saudi, Kuwait and the Emirates.  

I could see the Saudis tolerating $60-75 if they see evidence higher prices are leading to real acceleration of shifting to alternatives.  They're smart enough to know that once people shift, they won't come back.

If we have a serious worldwide recession such that demand drops back to say 70 MMBD from current 80-84 range, we could go even lower as at that level Saudi and Kuwait could turn off their entire production and there would still be a surplus.   OPEC had that size drop in the pull of their production in the 80's which led to oil going from $40 to $10 (say $100---$25 now).

http://www.wtrg.com/oil_graphs/PAPRPOP.gif

Odds of that happening???  got me.

by HiD on Thu Jan 3rd, 2008 at 04:39:17 PM EST
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