March 31, 2004

Opec heavyweights back production cut

Most of the Organisation of Petroleum Exporting countries on Tuesday favoured a cut of 1m barrels a day in oil output, despite increased concern in consuming countries that high crude prices threaten the world economy.

Saudi Arabia, the world's biggest exporter of oil and Opec's most influential member, on Tuesday confirmed it wanted the group to reduce output to stem the rise in oil inventories in consuming countries and hinder a fall in prices as demand declines this spring.

Ali Naimi, Saudi Arabia's energy minister, said on Tuesday:"More oil now will make a glut in the market and force prices to collapse, something we don't want. "Throwing more oil on the market because of high prices where they are today, would be destructive."

Saudi Arabia - backed by Venezuela, Libya, probably Iran and many of the smaller Opec members, wants the group to implement its decision of last month to cut its quota by 1m b/d to 23.5m b/d.

As of Tuesday, only Kuwait and the United Arab Emirates appeared to be in favour of postponing the cuts.
[...]

Washington officials have already begun pressing producers not to make the cuts. Meanwhile, investment banks have begun to predict that oil will this year have an increasing impact on the world's economic recovery.

Goldman Sachs estimates that growth in the Group of Seven industrial countries will be 0.3 per cent lower in the next 9-12 months because of the rise in oil prices. In the US, the bank believes the fading effect of the tax cuts will bring the pinch to real incomes to the fore.

As the U.S. leads the world in virtually all way, so it leads the globe economically.
The Sauds are using their biggest weapon to hurt our economy and more specifically, to weaken President Bush's economic recovery.
B*stards.

[...]
Oil inventories usually increase in the spring as the northern hemisphere no longer requires winter heating oil and the summer driving season has not yet kicked into gear in the US. Saudi Arabia and Opec are keen to keep inventories as low as possible because it gives them more control over the market.
[...]
Non-Opec countries that in the past have co-operated with the cartel, on Tuesday did not appear as eager to join the cuts.

Russia criticised Opec, saying prices were too high, but Mexico said it wanted market stability, adding that the cartel had not yet reached a formal decision. Mexico said it was co-operating with Opec by meeting with Saudi Arabia, but has so far decided not to join the cuts.

Of course, the House of Saudi princes are not only trying to hurt President Bush's reelection chances with their oil weapon, but they're making more moolah at the same time, which they need desperately both to support their lavish, decadent lifestyles and to fund their international Waahab jihad movement.
It remains to be seen whether they can keep this price/supply war up, given the pressure from other oil-producing countries (OPEC members and non-members) who just want to sell their crude and also the fact that by using this financial weapon, they're driving down the value of their own investments in American capital instruments.
Since the Saudis were outed as our Enemy by the 9/11 attacks, their deviousness is transparent and they are unable to project an image of amorphous Western bafflement like that that went with their previous manipulations of the oil market (like the oil "shortage" of 1974, which was nothing but Saudi revenge for American support of Israel in the Yom Kippur War.)
My fellow Americans, we can afford to pay a little more for gas!
Quit your whining and suck it up--we have to ride out the latest Saudi extortion scheme.
And don't forget to vote to reelect President Bush in November, either!