From German newspapers:
German Economy Secretary Robert Habeck of the Green Party is campaigning for major oil-consuming countries to join forces and jointly define a maximum price above which they will no longer buy oil. “The rules of the markets must change,” Habeck said in a discussion at the World Economic Forum in Davos. And, “We have to agree that we will not pay any price.” He called for the creation of an oil buyers' cartel to counterbalance OPEC+.
The head of the International Energy Agency, Fatih Birol, did the math for him: Oil and gas industry sales have jumped from $1.5 trillion before the covid crisis to $4 trillion now, he said.
The idea was already discussed publicly a few days ago: at that time, Italy's Prime Minister Mario Draghi spoke about it after talks with U.S. President Joe Biden. Further negotiations are underway in the EU. Such a cartel would not necessarily have to be permanent. Perhaps it would be temporary while the world reorganizes its energy flows. So far, however, not enough countries seem to have signed up to the idea to make such a buyers' cartel a success.
On the other hand, Indian Oil Minister Hardeep Singh Puri criticized the industrialized countries in the discussion at Davos for driving up energy prices so much. An oil price of $110 at present is a problem for the whole world, he said. He does not believe the world has an energy shortage. He raised the question of whether the high demand for oil also had to do with stimulus programs worth billions. Without naming them explicitly, he was aiming at the developed countries, first and foremost the U.S. and the EU, which had recently voted for – by far – the largest economic stimulus and investment program in history.
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What's your opinion on this matter? Should I be worried about my Oil stocks (Exxon, Chevron, Shell) or my investment in general? I can't imagine such an experiment ever being attempted or even be successful. If a price limit were set that was significantly below the market price, the Opec countries would simply stop supplying oil for 2 weeks, which would lead to massive economic turmoil in the industrialized countries. The OPEC countries should be able to withstand the loss of revenue in the event of a supply freeze for a short time. Or do you think the Europeans are betting that OPEC will not be united and that a few countries will pull out and continue to supply oil even at lower prices?
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