From FT Alphaville:
Opec officials blame volatility of oil prices on speculators. In fact, although speculators contribute to the magnitude of the price fluctuations, Opec remains their “prime cause” says Ed Morse, chief energy economist at Lehman Brothers in Thursday’s Insight column.
Opec’s role in volatility is reinforced by three factors suggests Morse: first, increased internal factionalism and the politics of consensual decision making; second, Opec’s greater prominence in incremental oil supply; and third, Opec’s own demand growthLow prices (circa 1998) offered an “incentive for collaboration” given shared goals, but as prices have risen, this has disappeared and socio-political agendas have come in to play. This includes the anti-US positions of Iran and Venezuela and the effectively under-the-radar transactions with countries like China, whose customs reporting is err… insufficient....MORE