Saudi Aramco ships more oil than any other company or country, 10% of the world's oil. Half of it's oil goes to the Far East.
Not only are they the biggest player in OPEC but they dominate the refining of oil and manipulate the price. Here's how the hustle works:
Saudi Aramco has an excess refining capability of 2 million barrels a day, that they don't use. The world's largest refineries (Khursaniyah and Shaybah) largely sit idle. They can come completely on-line in little over a month.
No company dares spend billions/years on a new refinery, when the Saudis can threaten to go on-line with 20% more refining and undercut the cost of processing at will and bankrupt anyone that tries to compete.
The Saudis control and monopolize refining. That's why Iran, is now building their FIRST refinery.
Example:
In 1990, Iraq invaded Kuwait, 3 million barrels/day went out of production, oil prices doubled to $40/barrel. Within 4 months Saudi Aramco increased production 60%, made up 75% of the lost production and in one year the price went back down to $20/barrel.
Who can compete with that? No one, and no one ever will. The Saudis can trump anyone and send the price anywhere.
So now the Saudis increase production only .3 million barrels/day and the spot price drops 24% in one month. They have 6 times that capacity UNUSED.
The Saudis are solely responsible for the price of oil.
BTW, the Saudis are discovering more oil each year than they pump. They ain't goin' away.
We can thank our own NY Mercantile Exchange for putting oil on their commodities market in 1983, creating oil futures. In 1986 the Saudis linked their oil price to the spot market.
Every time there's a hiccup in the middle east, a highly volatile futures market (that we created) panics, price skyrockets, and the Saudis never let it go down. Except when we come a beggin' for political cover.
Foreign oil must end if we want our freedom and stability.
Riveting lesson. Thank you.
Iran already has nine refineries in Tehran , Tabriz , Isfahan , Abadan , Kermanshah , Shiraz , Bandar Abbas , Arak and Lavan Island. They just don't meet the countries demand.
Then why are billions of dollars currently being spent on refinery expansion projects?
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