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.
Instability in the markets too... hah.. A price war for oil may be whats needed to kickstart the economy again.
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.
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.
Let the PRICE WARS begin!
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.
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.
My how times change...
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.
They already spend money like a drunken sailor so their ultimate demise is already in the works.
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