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    This May. 3, 2009 file photo shows an oil facility in Jubeil, about 600 km from Riyadh, Saudi Arabia

    OPEC Is Out of Business, But Dollar Crash Will Save the Oil Price

    © AP Photo / Hassan Ammar, File
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    The OPEC oil cartel is finished because its members don't trust each other, but a severe weakening in the US dollar will cause oil prices to rise later in the year, investment expert Michael Pento told Sputnik.

    The supply and demand of oil will both be subject to great volatility this year because many oil companies will not be able to maintain their business at low prices, and there will be a "destruction" of demand from Asia, Michael Pento of Pento Portfolio Strategies told Radio Sputnik.

    ​"What's going to save the oil market is going to be a fall in the US dollar, and I think oil bottoms around $20 a barrel and then climbs higher from there, but that won't happen until later this year."

    "Towards the end of 2016 the US Central Bank assents to the notion that they cannot engage in a protracted regime of rate hikes. The US economy is already headed for recession, we are already in a manufacturing recession, it's spilling over to the service sector and I think it's going to intensify over time this year."

    Members of the OPEC cartel are bidding for market share and are more interested in putting frackers out of business than supporting the oil price by agreeing to lower production, Pento said.

    "These is no OPEC any more, they do not trust each other."

    "I'm not at all enamored with the belief that these disparate nations can agree on anything anymore. There is no coalition that's cohesive and that can stay together."

    By focusing on oil prices, observers are missing the symptoms of a wider economic malaise across the world that continues because the problems of the 2008 economic crash were never solved, Pento said.

    A depression that was engendered by artificially low interest rates, asset bubbles and debt was then compounded by "taking interest rates down to zero and leaving them there for seven years."

    "Now they're trying negative interest rates. There's seven trillion dollars' worth of sovereign debt with a negative yield and yet we still can't generate any growth."

    "No-one acknowledges that falling oil prices are a symptom of the global metastasizing deflationary depression that's occurring right now."

    "It's not just oil prices that are down, it's every commodity, it's soy beans, corn, base metals, energy, so it's not just oil – oil is a symptom of the global slowdown and the only thing that's going to save that is a rapid amount of supply destruction later this year and a turn in the value of the US dollar."

    "We're entering into a world of what I call 'recessflation,' it used to be called 'stagflation,' now it's recessflation where you're going to have rising prices, higher inflation and economic stagnation on a global basis. This is one of the reasons why gold is having such a wonderful year."

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