Guru Adam Montana says - Iraq is the 2nd largest oil producer in OPEC. (Does it make sense that it's currency is valued so low?)

by **Ponee** Wed Jul 03, 2019 9:56 pm

Guru  Adam Montana

Interesting times right now. GOI members are playing very nicely... The G20 didn't produce any immediately exciting news that I've ran across, but it didn't bring us anything bad either. Back in the news, and worth a review, is the current OPEC agreement. Article: "OPEC deal important for oil market stability: Iraqi PM" Important notes in that article:

1. Iraq is the 2nd largest oil producer in OPEC. (Does it make sense that it's currency is valued so low?)

2. The production limitation agreement has been extended for 9 months - to boost the price of oil, rather than overproduce and drive the prices down. The amount of time the agreement has been extended isn't as important as the mere fact that it IS extended.  Oil is hovering just under that $60 mark, and the stability is a great thing. Stable oil prices = comfortable accountants = solid footing to RV. (Yes, the accountants have a say!)

Iraq is noted as the second largest producer... wait, what? We're talking about BLACK GOLD here, one of the most valuable commodities on the planet. And Iraq is #2... yet the currency they use is currently over 1000X weaker than the US dollar.  Collectively, OPEC nations have over 80% of the world's known oil reserves... yet Iraq, the 2nd largest producer in that group, has a currency that would require 2000 pieces of it to buy a loaf of bread at your corner store. OPEC as a group agreed to keep oil production low, to stimulate oil prices. The majority of the members placed their name on the list of participants in this endeavor when it was originally voted on.  The majority of the members did that... Iraq specifically did NOT.

I hope you understand how huge this is for Iraq. They are one of the founding members of OPEC. The 2nd largest producer in the group. Iraq is agreeing to support these cuts. But they did not agree to join the group in their cuts.  This gives Iraq carte blanche - complete freedom - to increase their production on a moment's notice, revalue their currency, and corner the market while they rake in cash to cover their "expenses". They may be operating on an increased production as we speak, stocking up hidden stores of oil in preparation for a huge push to bring in a massive amount of capital to cover the RV. There is more than one way to skin a cat, as they say, and that's just one aspect.   The above is certainly an oversimplification of the big picture, but the fact remains - Iraq is nodding in agreement with the cuts, but they have never committed to it. NOT. ONE. TIME.

07.03.2019