http://blogs.moneycentral.msn.com/to...h-of-opec.aspx
Posted Sep 11 2008, 07:01 AM by Douglas McIntyre
Saudi Arabia walked out on OPEC yesterday. It said it would not honor the cartel's production cut. It was tired of rants from Hugo Chavez of Venezuela and the well-dressed oil minister from Iran.
As the world's largest crude exporter, the kingdom in the desert took its ball and went home.
As the Saudis left the building the message was shockingly clear. According to The New York Times, “Saudi Arabia will meet the market’s demand,” a senior OPEC delegate said. “We will see what the market requires and we will not leave a customer without oil."
OPEC will still have lavish meetings and a nifty headquarters in Vienna, Austria, but the Saudis have made certain the the organization has lost its teeth. Even though the cartel argued that the sudden drop in crude as due to "over-supply", OPEC's most powerful member knows that the drop may only be temporary. Cold weather later this year could put pressure on prices. So could a decision by Russia that it wants to "punish" the US and EU for a time. That political battle is only at its beginning.
The downward pressure on oil got a second hand. Brazil has confirmed another huge oil deposit to add to one it discovered off-shore earlier this year. The first field uncovered by Petrobras has the promise of being one of the largest in the world. That breadth of that deposit has now expanded.
OPEC needs that Saudis to have any credibility in terms of pricing, supply, and the ongoing success of its bully pulpit. By failing to keep its most critical member it forfeits its leverage.
OPEC has made no announcement to the effect that it is dissolving, but the process is already over
Sounds like a good thing (a really good thing), but I dont pretend to know.
Regardless, in my eyes, dealing with this neanderthals in the middle east is tiresome as it is. Anything to free ourselves from their flippant whims is a better alternative in my eyes.
This should be bigger news here in the U.S., but then again it makes Bush and to a lesser extent McCain look good so we can't have that.
nice......watch oil prices fall dramatically.
It's not necessarily as it seems.
The Saudi's may just be playing a bluff to get a larger market share of OPEC.
Hypothetical:
The Saudi's get to supply 100 shares of 500. OPEC wants to reduce to 450. That would reduce the Saudi's supply to 90. They want to retain the 100 share and force the other counties to reduce production without them having to.
I'll bet they would play ball then!
If OPEC survived the early-80s (and it did), it'll survive now. Wishful thinking.
My guess is, the Bush Administration is putting pressure on their Saudi friends to increase production to help the appearance of a sounder economy for their Republican running for office -- not a huge surprise, this is what happened in 2004 -- and S.A. is having trouble keeping their loyalties intact.
This article is misleading....Saudi Arabia has always been OPEC. It's more accurate to say OPEC has kicked out all those other bull states.
SA has always done whatever suits its interests, and most of the times it also suits USA interests.
To say OPEC is going to die is ridiculous. As long as SA exists, there will be OPEC.
OPEC was formed by a Saudi politician, usurped by the Saudi King, and SA has always been the powerhouse of the organization.
Of course it's a guess for you. It's not in the best interest of of OPEC or the Saudis that the their best customer goes belly up into a depression because of high oil prices. So in your DNC opinion should we have $10 gallon gas?
Last edited by Biernutz; 09-11-2008 at 07:30 PM.
lol, doubt it does .
Saudi must be getting nervous that all this US energy independence stuff is more than just talk.
That's definitely a long-term concern.
Upthread someone says SA is bigger than OPEC; that's fairly true. OPEC has fallen apart before, but they may be seeing their last days in the next decades. Hopefully they don't get organized again and reduce supply; but I do think Bush/Cheney have asked them to turn on the taps.
Here's the bottom line:
You've got some greedy ers in OPEC like Iran and Venezuela (yes, I know, they're all greedy - stick with me for a sec) that just want to take money hand over fist to prop up their administrations and agendas.
You've got a few like Saudi Arabia that while greedy are also able to look at it from the economic side of things. And where they're coming from, a world wide recession (if oil prices keep going up, let's face it, we'll be there) comes and the bottom falls out of the oil market.
Further, Americans (OPEC's biggest customer) are pissed about oil prices and with the coming election no energy alternative is off the table. Think the country that put a man on the moon and built the atomic bomb won't find its way to energy independence if it puts its mind to it? Exactly...
SA is seeing all this and trying to get that price down under $100 bbl. It's clear the greedy ers won out in their talk, so now you've got SA going public, breaking ranks, and committing to keeping the price down.
Prove it.
the Saudis.
Does no one remember the statement that the War on Terror would be one of changing alliances? I do. It made total sense to me then and total sense to me now. At no point was it alluded that we would have the same allies with us every step of the way.
Now that there is fledgeling Democracy in Iraq we can throw our lot in with them and apply more political pressure to the Saudis' Medieval asses.
Make no mistake about it, Saudi Arabia is a target in the war on terror, they always were. #2 at the least.
I know, I know, you guys wanted an announcement from the Bush Admin of the complete and total war plan and which countries we were going to over in advance and while still needed them, not to mention pissing off every Muslim in the world in the process...I know, I know: War for Oil. War for Oil.
You do realize Bush and Saudi Arabia walk around holding hands, don't you?
Bin Laden is Saudi, by the way. And most of the 9/11 attackers were Saudi.
Now Hugo Chavez kicked the US ambassador out of his country. The Russian government as might recall took over their oil industry. Now Russia and Venezuela are conducting joint military excercises.
Maybe the Saudi's like being the fat cats and don't want to antagonize WWIII.
Can't wait for the 26th debate on foreign policy. As an American first, I'll totally open to hearing both sides on this one.
Then who was number one, Afghanistan or Iraq?
"not in the best interest of of OPEC or the Saudis that the their best customer goes belly up into a depression because of high oil prices."
Trying to manage the oil price for highest profits without plunging the world into reduced demand is their game, but it sure sounds like OPEC is not the rock-solid enforcing cartel it once was.
What is the lesson that oil suppliers learned with oil at $140, and now at about $100? At $140, the world kept spinning, no catastrophe, and spins OK at $100. The market is bearing $100 quite well, with demand holding steady.
If the price of oil really drops way below $100, back to $30 like it was when heckuva-job dubya took office?, it would be a buyer's market rather than seller's market, then OPEC would be useless, because any seller wants to sell the lowest number of units (barrels) at the highest price the market will bear. Esp true when the units are in limited, diminishing supply.
Whott-the- , who's terror targeting SA? OBL or dubya? We know OBL/jihadists have already hit SA hard, but dubya already occupies SA and Kuweit.
oil drops under $100 a barrel
Pakistan.
Matter of fact...W despises Saudi Arabia...it's his dad that had the connections with them.
I posted this on the forum long ago...Bush and Daddy Bush had a huge falling out over Saudi Arabia.
No one listened.
Bin Laden is Saudi, by the way. And most of the 9/11 attackers were Saudi.
No ...you do realize that Saudi Arabia is the Muslim Holy Land, the most stable Arab country, and has a Trillion dollar econony(yet somehow still manages to have a huge unemployment rate).
You do realize Germany and Japan weren't the first countries we attacked when we went into WWII don't you?
The first place we went into was North Africa...
He should have declared War on Saudi Arabia when he did Iraq... strategic alliances...they've for morons!
coulda fooled me
When will the US kick Hugo Chavez' ass?
"Saudi must be getting nervous that all this US energy independence stuff is more than just talk."
no. The US will never achieve oil independence, but even if it did, the rest of the world is addicted as the US is. There's infinite, growing demand outside of the USA.
Many top leaders talk to the Saudi's. Just the nature of politics.
Did you know senator Kerry also talked allot to the Saudi Royal family?
Being a senator rather than the president, what was he doing....
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