Its not often I start a thread with the admission I may have been wrong about something, but here we are.
I was pretty certain no real long term good was going to come out of a prolonged war with Iran.. mostly because I dont feel there are real diplomatic solutions to anything involving that dipshit country and any war there is destined to turn into a quagmire because of religious nutjobs that cant be reasoned with or properly threatened into submission...
Of course as with any complex situation, its hard to see all the long term angles that could develop...
So when the oil disruption ****** with oil prices, everyone was quick to blame Donald for increasing gas prices... but now that its unmistakably tied to him, a very unexpected thing has happened... Opec is falling apart and may never recover
Opec has been a thorn in our economy for 66 years... see for a bunch of countries, oil is their primary or basically only real means of income.. in 1960 these countries colluded together to keep the price high by regulating production
This Iran war has pressed that alliance on several fronts... the first was months of inability for certain countries to move product, leading to billions of lost revenue. This caused an immediate increase in oil prices... the opec countries that had open avenues to export made mad bank, the ones that didnt gathered a stockpile of oil and debt
The second thing that happened was countries relying on Opec oil that might be disrupted from Iran started repurposing oil units to electrical and gas.. so for instance, China, who was already reeling from the Venezuela oil gutpunch, is making a huge push to minimize oil dependency... that permanently removes a huge demand from the market..
So here is what is happening, the afflicted OPEC countries want to seriously increase production for the foreseeable future to offset their deficits... the unaffected OPEC countries dont want to do this, because it will drive down the price by a metric ton, because high oil prices only work if they keep an artificially high demand by limiting supply..
But these are oil dependent countries... they dont have other means to make up that revenue... so several are now looking to leave OPEC and just dump oil en mass on the market ... this will cause a domino effect on other countries needing to produce more to make up for lower prices
But the US is still the largest oil consumer in the world, using roughly 20% of the oil produced... its estimated annual iseage in the us is 7.5 billion barrels a year..
Oil is typically 80 bucks a barrel the past decade, (though the official number says 71, but that is artificially depressed from covid driving the price to $19 due to lack of demand from everything being closed)
Its almost universally expected to drop to 60 next year after this... and projections for 28 are even lower... there is a prevailing theory if others follow UAE's lead and leave Opec, oil in 28 may be down to 50 or 40 dollars a barrel..
Here is a link to this stuff https://www.cnn.com/2026/07/06/economy/the-fight-for-the-future-of-opec-begins-now
Just from US direct consumption, not even counting overseas products made with the use of oil, thats 300 billion dollars off of costs if it dips to 40 per barrel.. thats like 1% of our GDP..
Now let me be clear.. Trump nor anyone really expected Iran to turn on its own allies and shutter that straight.. this was not some grand master plan..
Opec was on the ropes since Covid and China was looking to move away from the oil industry since their cheap illegal stiff was not easily attainable anymore..
Other countries had been trying to back away from that particular fossil fuel for some time..
But Trump is going to get credit for it.. and take it, of course...
Libs jumped the gun trying to blame him for a short term spike, they are going to have to eat the results as prices start plummeting as the midterms near..
Honestly if this Iran war causes the end of Opec, then I was wrong and it is totally warranted and useful
I was pretty certain no real long term good was going to come out of a prolonged war with Iran.. mostly because I dont feel there are real diplomatic solutions to anything involving that dipshit country and any war there is destined to turn into a quagmire because of religious nutjobs that cant be reasoned with or properly threatened into submission...
Of course as with any complex situation, its hard to see all the long term angles that could develop...
So when the oil disruption ****** with oil prices, everyone was quick to blame Donald for increasing gas prices... but now that its unmistakably tied to him, a very unexpected thing has happened... Opec is falling apart and may never recover
Opec has been a thorn in our economy for 66 years... see for a bunch of countries, oil is their primary or basically only real means of income.. in 1960 these countries colluded together to keep the price high by regulating production
This Iran war has pressed that alliance on several fronts... the first was months of inability for certain countries to move product, leading to billions of lost revenue. This caused an immediate increase in oil prices... the opec countries that had open avenues to export made mad bank, the ones that didnt gathered a stockpile of oil and debt
The second thing that happened was countries relying on Opec oil that might be disrupted from Iran started repurposing oil units to electrical and gas.. so for instance, China, who was already reeling from the Venezuela oil gutpunch, is making a huge push to minimize oil dependency... that permanently removes a huge demand from the market..
So here is what is happening, the afflicted OPEC countries want to seriously increase production for the foreseeable future to offset their deficits... the unaffected OPEC countries dont want to do this, because it will drive down the price by a metric ton, because high oil prices only work if they keep an artificially high demand by limiting supply..
But these are oil dependent countries... they dont have other means to make up that revenue... so several are now looking to leave OPEC and just dump oil en mass on the market ... this will cause a domino effect on other countries needing to produce more to make up for lower prices
But the US is still the largest oil consumer in the world, using roughly 20% of the oil produced... its estimated annual iseage in the us is 7.5 billion barrels a year..
Oil is typically 80 bucks a barrel the past decade, (though the official number says 71, but that is artificially depressed from covid driving the price to $19 due to lack of demand from everything being closed)
Its almost universally expected to drop to 60 next year after this... and projections for 28 are even lower... there is a prevailing theory if others follow UAE's lead and leave Opec, oil in 28 may be down to 50 or 40 dollars a barrel..
Here is a link to this stuff https://www.cnn.com/2026/07/06/economy/the-fight-for-the-future-of-opec-begins-now
Just from US direct consumption, not even counting overseas products made with the use of oil, thats 300 billion dollars off of costs if it dips to 40 per barrel.. thats like 1% of our GDP..
Now let me be clear.. Trump nor anyone really expected Iran to turn on its own allies and shutter that straight.. this was not some grand master plan..
Opec was on the ropes since Covid and China was looking to move away from the oil industry since their cheap illegal stiff was not easily attainable anymore..
Other countries had been trying to back away from that particular fossil fuel for some time..
But Trump is going to get credit for it.. and take it, of course...
Libs jumped the gun trying to blame him for a short term spike, they are going to have to eat the results as prices start plummeting as the midterms near..
Honestly if this Iran war causes the end of Opec, then I was wrong and it is totally warranted and useful
