Posted on 01/30/2007 7:32:18 AM PST by meg88
Saudi Arabia, which has aggressively shaved its oil output in a battle to shore up prices, will reduce production by another 158,000 barrels per day beginning Thursday and more cuts are on the way, according to a media report.
The Saudi cut is seen as an aggressive move to keep the price of the U.S. benchmark crude above $55 a barrel, The Wall Street Journal reported Tuesday in its online edition, quoting Roger Diwan, an analyst at PFC Energy, a Washington industry consultancy.
The latest cut means Saudi Arabia will have reduced production by about 1 million barrels per day in the past six months, The Journal said, citing an unnamed senior Saudi oil official.
The reductions are intended to shrink inventories of oil that had ballooned last year as demand growth for petroleum faltered, The Journal reported.
Saudi Arabia, the world's largest oil exporter, is the oil cartel's de facto leader and closely watched by markets.
Word of the Saudi move to further trim output comes as traders are trying to learn if OPEC is going to cut production in line with its announced plans, the Journal said, noting OPEC's members often produce more than they have pledged.
Saudi Arabia's reduction is nearly double the total cuts it agreed to make under two output accords hammered out at OPEC at meetings in October and December, The Journal said.
The 10 OPEC members that committed to the cuts were producing about 27.5 million barrels a day in September, the Journal said, and if the agreed-upon cuts are fully implemented, output would drop to 25.8 million barrels a day in a global oil market of about 85 million barrels a day.
The U.S. benchmark crude closed $1.41 a barrel lower to $54.01 Monday on the New York Mercantile Exchange
(Excerpt) Read more at marketwatch.com ...
Translation: Bush has leaned on the Saudis hard enough to get them to screw Iran.
Forgot to say: Not.
LOL
What kind of "leaning" on the Sudis would you like?
We knew this.
How does increasing the price of crude 'screw Iran'?
The dropping oil prices have hurt Iran, increasing them now would seem to help Iran.
How does this screw Iran? It seems it screws Americans. However, I am pretty ticked at Bush with his new socialist healthcare tax plan...I thought I was voting for a conservative Republican.
SARCASM---- Bush's fault.
I don't see how this screw Iran either. I agree with you. My husband has been transferred to Wisconsin; we will go in the summer. He say many cars there run on some form of ethonol. Lets shore up our production and tell Saudi Arabia we are cutting...buying their overpriced crap. Tell them to um go pound sand. The only thing that makes these crazies important is their oil.
It seems like every time we do this, Opec cuts their prices and makes our own domestic production unprofitable. Now if you are supporting some sort of protectionism for domestic oil interests that's fine. However, usually when prices increase, we punish American companies because someone has to take the blame.
I think the US needs to set up some benchmarks in Iraq:
Every time the price of oil goes up $2 a barrel-- another Sunni neighborhood loses American force oversight.
The Saudis need to wake up and smell the coffee.
We have the Saudis right where we need them. If they want the Shias to rule the middle east, we can arrange that.
"However, usually when prices increase, we punish American companies because someone has to take the blame."
And you can rest assured that with the dems in power now, that will only increase! Ethanol is overated imho. You get poor gas mileage when it is added to gasoline, so you actually end up using more OIL!! LOL
The republicans should have opened up Anwar and off shore drilling while they had the chance. Too late now!
Does anyone remember how McCain voted?
Our friends the Saudis.
See post 3. ;)
You didn't read my second post. To sum up, the Saudis are not being helpful. Surprise. Iran has huge oil reserves, but they have relatively little refining capacity, and have to buy nearly half of their refined products, gasoline, from the rest of the world. Lowering the price of crude would have reduced their revenues, but they still would have been buying (more expensive) gasoline on the world market. According to Business Week: "Iran's looming crisis is the result of years of neglect and underinvestment. As in other oil-producing countries such as Venezuela and Mexico, the government treats the oil industry as a cash cow, milking its revenues for social programs. It allocates only $3 billion a year for investment, less than a third of what's needed to get production growing again.
Compounding the pressure are policies that encourage profligate energy use. Gasoline prices are set at 35 cents a gallon, which has helped fuel 10%-plus annual growth in consumption, PFC Energy figures. The national thirst for gasoline far outstrips domestic refining capacity, so Iran will import about $5 billion in gasoline this year, or about 40% of its needs. The government is planning a $16 billion refinery building program to boost capacity by 60%. But unless Iran raises fuel prices, the new plants will just mean more consumption.
An oil squeeze could spell trouble for President Mahmoud Ahmadinejad. The populist leader has won backing at home through generous handouts. Ahmadinejad has ratcheted up public spending this year by 21%, to $213 billion, on everything from aid to rural areas to housing loans for newlyweds. He has also promised some $16 billion in outlays from a special $30 billion fund set up to tide Iranians through future hard times. Without a healthy oil sector, Iran's social spending could bust the national budget--and reignite inflation.
Iran badly needs fresh foreign investment to shore up the oil industry. Tehran has attracted some $20 billion in funding for oil and gas projects since 1995 from overseas companies including Royal Dutch/Shell Group (RD ), France's Total (TOT ), and Norway's Statoil. But new investment has largely dried up in recent years because of lingering worries about the risk of war with the U.S. and disenchantment with Iran's tightfisted terms. Outsiders are offered contracts only to drill wells--rather than operate fields--and get just a small share of profits from output. For instance, Italian oil giant ENI (ENI ), a fixture in Iran since 1957, produces about 35,000 barrels per day but doesn't expect to get any bigger...
They own it. They can do what they want with it.
This proves:
1. The oil market is not a free market.
2. The US national security depends on our getting unhooked from Middle East oil. We need to go Coal Liquefaction and Nuclear. Now!
Does anyone remember how McCain voted?
From what I recall, he was not in favor of the 'nuke' option to block the dem filibuster on Anwar, so the measure went down in flames!
How much do you want to bet that the first time we try to filibuster a dem measure that Reid pulls out the so called 'nuke option'?
Thanks for the link(grin). Makes better sense now.
Invest in my country or I tell you I will blow you UP!
And the pubs will say "See, they're the ones that did it, we didn't do it because we're better people than them", but in the end the rats will have won again.
Course it won't be called the "nuclear option" or even the "patriot option" or whatever the pubs were calling it. It will probably be described as "a senate rules change relating to a certain parliamentary maneuver."
No way will I take that bet. It's a certainty. Of course our fair and balanced news media will tell the public it was necessary because of obstruction on the part of the Republican minority.
Archer-Daniels Midland is also getting into BioDiesel as well. They seem to be hedgeing their bets, on the ethanol-biodiesel coin.........
Oil is a global commodity. It doesn't matter who we buy oil from.
"It will probably be described as "a senate rules change relating to a certain parliamentary maneuver."
You are probably right. It's maddening!
But I thought the Iraq war was about bringing cheap oil to the American consumer... darn,, another wacko left theory down the crapper.
It was an educational 'rant'! Thought you might be interested in this link:
http://www.freerepublic.com/focus/f-news/1776135/posts
In 2003, the Persian Gulf countries (Bahrain, Iran, Iraq, Kuwait, Qatar, Saudi Arabia, and the United Arab Emirates) produced about 27% of the world's oil, while holding 57% (715 billion barrels) of the world's crude oil reserves. Besides oil, the Persian Gulf region also is important because it contains huge reserves (2,462 Tcf) of natural gas, with Iran, Qatar, Saudi Arabia, and the United Arab Emirates holding the world's second, third, fourth, and fifth-largest reserves (behind Russia), respectively.
What were you thinking man? Bush nor his daddy has EVER been "conservatives." The last "conservative" elected President was Ronald Reagan. The Bushes are globalists and as such Marxists. Like the Christian religion there are many different sects of Marxism and the Bushes fall into the more "moderate" wing. I have been forced to vote for the Bushes every time they've run because the alternative is voting for a fanatical Marxist and I would rather slow down the decline of our nation by keeping the fanatical moonbats out of the White House for as long as possible. But I am becoming tired of that strategy which is one reason I am supporting Tom Tancredo for President. The man is a true conservative. The problem we have is so many of you out there claim to be conservative but you will vote for another Bush when you cast your ballots for McCain, Giuliani, Mitt or some other schmuch instead of supporting the candidate in the primary that best supports what you all claim your values are. If we don't put Tancredo or Hunter into office in '08 this nation can put is head between it's legs and kiss it's ass good-bye in my opinion.
TOM TANCREDO '08
JMHO
Thanks
Energy independence now.
Damn them all. Now we see the true reason why our oil prices are so high to begin. They want to steal from us to fund their expansions overseas.
The Saudis have built tremendous overcapacity for the explicit purpose of being able to reduce or increase production as they see fit, for three purposes:
1. To keep prices high enough that they maximize revenue & profit.
2. To keep prices low enough that they keep competition (higher-cost Russian, Mexican, etc oil; and alternative fuels, nuclear, etc) away & guarantee a long-lived market for their amazingly valuable reserves.
3. As a source of geopolitical power.
Oil tends to have a $50+/barrel war-time priceband, and a $25+/barrel peacetime priceband, although if the Saudis & OPEC lost control of production it could be as low as $20 and under.
The Saudis have a vested interest in keeping Iran in check right now. Given Irans crude exports and refined imports, I'm not sure what hurts or helps Iran more, other than complete embargoes on either. And it doesn't matter which country buys - even if the US buys from Norway, as long as anyone else buys from Iran & Saudi, it is the functional equivalent as buying directly from them. Except for some basic quality differences, crude is almost as fungible as money.
So what does this Saudi move mean? Pure profit-taking? The Saudis think too long-term for that. I assume they are making the market profitable enough for their competitors to boost up production... and quietly telling their "friends" that if / when things get hot, they will also pick up production again, to ensure there's enough jet fuel, etc in the market to do the job.
Dirty rotten Chavez enablers
Sigh.
In the West, the "evil oil companies" reinvests their profits into oil production with the goal of selling more oil long-term efficiently.
Let's hope we can increase production in shale oil in North America and build more nuclear plants so we can tell the Arabs to "shove it".
The double-talking Saudi's have allegedly lined their oil infrastructure with explosives so they can destroy everything if they are toppled. I bet we can dig new wells and have the oil back on line in under 36 months.
Nationalize our oil industry, flood the market with our own oil or quit buying? I believe those are our choices to independently drive down prices.
"aggressively shaved'
When you get an oxymoron six words in,
set your beebers to stune.
This sounds like a 180 to what was said two days ago.
"Saudi Officials Seek to Temper the Price of Oil"
http://www.freerepublic.com/focus/f-news/1775043/posts
When have they done that? The production ceilings and production data are available here.
No, that is just the difference between the Wall Street Journal and the New York Times.
Well if they can describe delivering a baby and then sticking a pair of scissors through the back of its neck as "a certain type of late-term abortion", then I have no doubt the can and will spin the nukular option.
You mean the Saudis are not doing what they said? (sarcasam button off)
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