Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

Opec warns of oil price war with Russia
Financial Times ^ | July 19 2002 20:23 | By Matthew Jones in London and Robert Cottrell in Moscow

Posted on 07/21/2002 4:08:04 AM PDT by enrg

The Organisation of Petroleum Exporting Countries said on Friday it was prepared for a price war unless Russia took steps to curb its rapidly growing production.

A senior Opec official said the cartel, which supplies about a third of the world's oil, was becoming increasingly frustrated by Russia's improving relationship with the US and its growing share of the world market.

"The Russians are playing a dirty political game with Opec and it is becoming very hard to trust them. If they are keen on having a price war, so be it. It is time we abandoned the soft approach and became more aggressive," said the official.

The comments mark an escalation in the tension that has been building between Opec and Moscow over the past six months.

Russia, in common with Mexico and Norway, other large non-Opec members, agreed to trim exports in the first half of this year in an effort to maintain oil prices in Opec's $22-$28 per barrel target range.

But many observers believe Russian producers kept volumes high through exports of refined products and exports of oil to neighbouring countries of the Commonwealth of Independent States, which were not covered by the loose agreement with Opec.

The Opec official's comments followed remarks by Rilwanu Lukman, Opec president, that the organisation had "the reserves and the capacity" to respond to a price war with Russia.

Opec ministers are due to meet on September 18 to decide whether to change the current production quotas. The official said an increase in output was backed by most ministers, with the intention of driving crude oil prices down by $3 or $4 a barrel.

The US has been encouraging Russia to raise its oil production and exports as relations between the two countries have improved since the terrorist attacks on the US last September. It sees Russian oil as a means of reducing Opec's ability to fix prices and as a hedge against instablity in the Middle East.

According to Renaissance Capital, a Moscow investment bank, Russian crude oil production rose 8.6 per cent year-on-year in the first half of 2002, and total crude oil exports rose 3.4 per cent.

In February this year Russia briefly overtook Saudi Arabia, the leading member of Opec, as the world's biggest oil producer.

Leo Drollas, oil analyst at the Centre for Global Energy Studies, said any move by Opec to drive down the crude price would be "nonsensical".

"The only way Opec could win the market share issue would be by dropping prices to $12-$15 a barrel and that would hurt Opec countries more than Russia," he said.

Brent crude, which has been supported by security concerns in the Middle East and Iraq, fell 31 cents to $25.98.


TOPICS: Business/Economy; Front Page News; Russia
KEYWORDS: arabs; crude; crudeoil; energy; energylist; oil; opec; petroleum; russia; suv
Navigation: use the links below to view more comments.
first 1-2021-4041-53 next last
Interesting stuff. If a price war does erupt, I hope America (at least) will buy Russian oil even if it is a few dollars more expensive to kick OPEC in the guts.

Instability in the markets too... hah.. A price war for oil may be whats needed to kickstart the economy again.

1 posted on 07/21/2002 4:08:04 AM PDT by enrg
[ Post Reply | Private Reply | View Replies]

To: enrg
This is ludicrous, the lieing arabs damn well know that most of their regimes would topple if they ran such low prices...they can't afford it. Saudi Arabia...through the usual Arab mismanagement, is already running a deficit.
2 posted on 07/21/2002 4:15:31 AM PDT by Stavka2
[ Post Reply | Private Reply | To 1 | View Replies]

To: enrg
Russia has made noise that it can/might be willing to produce at around $15 per when it gets production ramped up. Might be enough to save this economy, at least for awhile
3 posted on 07/21/2002 4:16:31 AM PDT by steve50
[ Post Reply | Private Reply | To 1 | View Replies]

To: enrg
Opec ministers are due to meet on September 18 to decide whether to change the current production quotas.

And no doubt discuss a possible price war with Russia. And around this time Bush decides to kick Saddams butt and is home in time for the November election a hero, with (hopefully) an economy that is fast going back on track. On top of this it clearly emerges that Russia is going to kick OPEC in the guts with its stupid price war. And viola!!! everyone wins. Except the M.E crazies.

4 posted on 07/21/2002 4:17:55 AM PDT by enrg
[ Post Reply | Private Reply | To 1 | View Replies]

To: enrg
Price wars? I say go for it. I'd love to see gasoline hit 50 cents a gallon again.
5 posted on 07/21/2002 4:18:44 AM PDT by Just another Joe
[ Post Reply | Private Reply | To 1 | View Replies]

Comment #6 Removed by Moderator

To: Stavka2
If SA runs a deficit, that means the Saudi family itself is way in debt. That's why their threats to cut off our oil are without teeth. I do hope that we continue to buy Russian oil...
7 posted on 07/21/2002 4:20:22 AM PDT by Mamzelle
[ Post Reply | Private Reply | To 2 | View Replies]

To: Stavka2
This is ludicrous, the lieing arabs damn well know that most of their regimes would topple if they ran such low prices...they can't afford it.

Very true. Of course that might not stop them. I mean if they had half a brain, they wouldn't be in the pile of feces they're in now. So it may just happen.

8 posted on 07/21/2002 4:21:04 AM PDT by enrg
[ Post Reply | Private Reply | To 2 | View Replies]

To: enrg
Whatever you do, don't throw me in that briar patch. Heeheehee.
9 posted on 07/21/2002 4:21:33 AM PDT by ABG(anybody but Gore)
[ Post Reply | Private Reply | To 1 | View Replies]

To: enrg
Let the PRICE WARS begin!

10 posted on 07/21/2002 4:45:16 AM PDT by ppaul
[ Post Reply | Private Reply | To 1 | View Replies]

To: Stavka2
The Saudis have misused their oil by making the profit a tool to propagate militant Islam and fund terrorism around the world. Forcing down the price of oil is a fair and just way of putting a stop to that.
11 posted on 07/21/2002 4:47:21 AM PDT by NetValue
[ Post Reply | Private Reply | To 2 | View Replies]

To: NetValue
Yep, I agree. The Saudis may not have enough slush fund money
to pay all the homicide bombers and build all them monuments to
themselves. Wouldn't that just be too damn bad.

... as W. would say, 'I love it when a plan comes together'.

Three cheers for Russia as they finally join the civilized world.

tarpon
12 posted on 07/21/2002 4:51:54 AM PDT by snooker
[ Post Reply | Private Reply | To 11 | View Replies]

To: enrg
What would be even sweeter would be a contract with Japan for Russian crude. The Saudis would go ballistic. Especially if they could just pipe it across the Sea of Japan.

OPEC is now feeling the pain of the other nations who are NOT part of their enegy control of the world. Let Russia prosper, let the sand rats drink their oil.

13 posted on 07/21/2002 4:55:52 AM PDT by Pistolshot
[ Post Reply | Private Reply | To 1 | View Replies]

To: Just another Joe
Price wars? I say go for it. I'd love to see gasoline hit 50 cents a gallon again.

If you think for one moment that Big Oil is gonna let retail pricing of refined products follow in line with cost of the prime commodity, your nuts and ignorant of history.

I believe that any hint of a downward trend will spike the stock of companies like Exxon-Mobil, Shell and Marathon like three years ago.

And I also believe that the federal and state gov't will fill any vacuum from retail price decline with increased excise and sales taxes. Bottom line...Profits up for Big Oil, price at the pump static.

14 posted on 07/21/2002 5:05:25 AM PDT by woofer
[ Post Reply | Private Reply | To 5 | View Replies]

To: enrg
I wonder how the Saudis will want their crude...black or with cream and sugar? A few crumpets on the side with jam should be nice.
15 posted on 07/21/2002 5:06:06 AM PDT by GatĂșn(CraigIsaMangoTreeLawyer)
[ Post Reply | Private Reply | To 1 | View Replies]

To: enrg
I will pay more to buy Russian oil rather than finance Islamic Radicals.

My how times change...

16 posted on 07/21/2002 5:07:43 AM PDT by Caipirabob
[ Post Reply | Private Reply | To 1 | View Replies]

To: Stavka2
I'd say we have the camel loving Arab pigs over a barrel. I'd love to see us bring down all the corrupt regimes in the middle east--with the term "corrupt" probably being a superfluous qualifier.
17 posted on 07/21/2002 5:10:30 AM PDT by Irwin Corey PhD
[ Post Reply | Private Reply | To 2 | View Replies]

To: NetValue
By non-Arab gasoline from Getty (Russian-owned), BP, Amoco, Sunoco, or Citgo. Try to avoid buying Arab gasoline from Exxon, Mobil, Chevron, Texaco.
18 posted on 07/21/2002 5:12:43 AM PDT by tomahawk
[ Post Reply | Private Reply | To 11 | View Replies]

To: Stavka2
This is ludicrous, the lieing arabs damn well know that most of their regimes would topple if they ran such low prices...they can't afford it.

My take is that if it gets close to that, the Arabs will attack Israel and get their heads handed to them for the seventh time in a row.

Then they will start fighting amongst themselves and pretty soon there will be a whole bunch of tiny little sheikdoms, just like there were before westerners started putting together these Arab countries.

19 posted on 07/21/2002 5:17:22 AM PDT by LibKill
[ Post Reply | Private Reply | To 2 | View Replies]

To: Stavka2
When the Arabs run out of oil, they will be stuck with nothing but millions of acres of kitty litter as their only asset.

They already spend money like a drunken sailor so their ultimate demise is already in the works.

20 posted on 07/21/2002 5:28:16 AM PDT by capt. norm
[ Post Reply | Private Reply | To 2 | View Replies]


Navigation: use the links below to view more comments.
first 1-2021-4041-53 next last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson