OPEC+ Output Cut: The Bigger Picture

OPEC+ Output Cut: The Bigger Picture

There's most assuredly a tie in between the naked politicization of the world's most financialized commodity and various "new world order" macro narratives. Considering the popularity of such narratives in 2022, and particularly the extent to which they're inspired by realignments associated with the war in Ukraine and the implications for commodities in a world bedeviled by inflation, it's important to consider the angles. OPEC+'s "shock" decision to curb output by two million barrels per day
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5 thoughts on “OPEC+ Output Cut: The Bigger Picture

  1. The timing of this cut in relationship to the midterms should be disturbing to anyone involved in American government. Should is naive I know, this will of course be blamed on Biden when gas prices rise again by the same folks that blame him (and all Democrats) for everything that isn’t right in the US. However, as you have stated, there are many tools available to the Biden admin to combat this attack on global oil prices and he should lever those very publicly to ensure that accountability lies with those who are responsible.

    The dollar dominance noted in this article has had me thinking a lot lately about currency globally and the repeated improper reporting of the dollar’s demise. I have seen these headlines pop up for over a decade, blaming the ever growing national debt on why in the very near future the dollar will no longer be the global reserve currency. I think the past couple of weeks have shed a lot of light on how preposterous that thinking is. While the debt is very high in the US and, inflation whether attributable to that debt or not, is out of control; the dollar is dominating every single other currency on the planet with ease. This seems to illustrate the isolationary view we American’s tend to take towards everything including economics. Sure, the debt is growing and higher than it has ever been, what about other national debts though? Do we even think or report on how their government’s are handling currency and debt? Not really. So with an isolationist viewpoint on currency and the economy it becomes easier to sell the idea that higher US national debt will ultimately lead to the unwinding of dollar dominance. Nothing is ever that simple.

  2. Excellent rigorous analysis Mr H. Its clear that no fiat currency can can come close to replacing the hegemony of the petrodollar. And the Saudis would rather wait for a friendlier Republican administration than try to experiment with any other fiat currency to disturb the petrodollar regime. However, is there a case to be made for gold as a non-fiat store of wealth and medium of exchange that would be more “neutral” than any fiat currency ?? I would be interested in a similarly rigorous analysis of why gold, if adopted and demanded as a medium of exchange by OPEC nations would not have the ability to threaten the hegemony of the petrodollar. Certainly gold eclipses the yuan or euro as reliable store of value. Thanks again for the prolific output of excellent articles the past few days.

  3. Thoughtfully written and well-researched; I do love your macro think pieces.

    A theme you have visited before is that de-dollarization happens at a glacial base. Poszar et Al are perpetually crying wolf (maybe not Poszar for too long; he has a day job which should be thrown into sharp relief against his hobby thesis the moment the next liquidity crisis hits).

    I would love to hear H’s thoughts on what an earnest dollar slide WOULD look like! What might the catalysts be, and on what time frame would they ply out?

    That’s probably asking the impossible of you; your talent is for tuning into the zeitgeist and integrating the geopolitical with the economic.

    Nevertheless: even conceding that all crystal balls re bunk, I’d be interested to hear your thoughts on a hypothetical emergence of a new world order, if ever you have any to share.

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