By 2016 the EU will follow.
Meanwhile OPEC’s honey pot of "petrodollars" gets ever bigger...
Manraaj Singh explains how to position yourself to profit as the transfer of wealth from west to east picks up speed...
OPEC is doing everything it can to drive up the oil price.
No sooner had the words "oil at $120 per barrel" left my lips yesterday, Chakib Khelil, President of OPEC, said it could hit $200 and there was little he or his cartel could do about it.
It’s making Americans restless...
A group of senators have just written a letter to President Bush accusing the Saudi’s of slashing oil production by 2 million barrels a day over the last three years, even as the price of oil has skyrocketed.
The Saudis don’t seem too bothered about America’s oil woes. Of course, the U.S. is making OPEC’s job so much easier...
Its interest rate cuts are driving down the value of the dollar and its sabre rattling at Iran is boosting the "risk premium" in the price of oil.
Some analysts have put the value of that premium at up to $40 per barrel.
But the simple fact is...
OPEC won’t raise output... non-OPEC producers can’t
OPEC simply won’t raise output, the non-OPEC producers simply can’t.
Right now, the non-OPEC countries produce about 60% of global oil supply - about 50 million barrels a day. But they’re stuck there. In fact production is falling quickly in some of the biggest of them.
Norway’s output has fallen by 25% from its peak in 2001. British output has slumped by 43% in eight years. In America, the giant Prudhoe Bay field in Alaska has seen output drop by 65% from its peak two decades ago...
And in Mexico, production at the giant Cantarell oil field is collapsing and they haven’t found any new fields to replace it. But Mexico’s economy is growing rapidly. So, domestic consumption is shooting up while production is falling. Mexico’s exports could be wiped-out within five years. That means more sleepless nights for America’s leaders because Mexico is the second-biggest oil exporter to the US.
Then there’s Russia... the biggest contributor to the growth in global energy supplies over the last decade. Output shot up from about 6 million barrels in 1996 to about 10 million barrels per day today. But the Russians say that they’ve hit peak production... so it’s all down hill from here.
Of course, huge chunks of Siberia are still unexplored and there could be lots more oil out there.
But the Russian government has shown a nasty habit of muscling-out Western companies operating in the country to gain more control over its energy resources. So they are reluctant to invest and we probably won’t see any meaningful growth in supplies there for years.
OPEC turns the screws on global oil prices
As they see output falling everywhere, OPEC is steadily turning the screws on global oil prices.
I think it’s almost funny to watch the reactions of politicians everywhere. Someone must have forgotten to tell them that OPEC is a cartel. Its job is to make its members rich, not provide cheap oil to faltering Western economies.
And it must be doing something right... because the petrodollars are really beginning to pile up.
Sovereign wealth funds already control $3.5 trillion in assets - that’s more than the U.K. French or German economies are worth. But that’s nothing compared to what’s still to come...
By 2015, their assets will be worth more than the entire U.S. economy and by 2016 they will overtake the European Union.
Leave China out of that equation and practically all those sovereign wealth funds are being boosted by the rising price of oil.
And the fastest growing funds are based in oil producing countries that don’t figure on most investor’s maps.
In the last five years, Nigeria’s SWF has grown by 291%, Oman’s by 256%. Kazakhstan’s SWF is up 162%; Angola’s by 84%...
How to ride the ‘petrodollar’ bandwagon
Now you can’t invest directly in a sovereign wealth fund, but they’re an excellent way of keeping track of where the money is going today and where the biggest economic booms are happening right now...
The point that I’m trying to drive home here is that high oil prices aren’t going to benefit all the oil producers equally.
The real tide of petrodollars is flowing to the OPEC countries. The big winners are going to be countries like Nigeria and Angola, Venezuela and Bahrain... and we can already see the winners and losers in the new equation.
Here at Profit Hunter we are well placed to benefit from this tide of wealth, which can only increase in the years ahead.
We aren’t directly invested in oil. There are too many unknowns that go into its price. Instead we are focussed on uncovering the investment opportunities being opened up by this dramatic shift in economic power.
And we have no doubt that that shift is going to continue.
We’ve been emphatic that we are now in the era of $100 oil. I doubt that we are ever going to see it go back below that price for a sustained period.
What does all of this mean for us as investors?
Simple - if we can tap into the same pools of capital that are fuelling the growth of these sovereign wealth funds, we are going to be on to very good thing indeed.
You’re very welcome to join us... just follow the links below
Start receiving Profit Hunter with a 3 month risk free trial by Direct Debit
Regards,
Manraaj Singh
Editor Profit Hunter
P.S. If you enjoyed this article then we encourage you to sign up for Profit Hunter. Track down exciting opportunities in the worlds’ emerging markets and always stay ahead of the curve.
