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Strategies & Market Trends : Heinz Blasnik- Views You Can Use
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To: Wyätt Gwyön who wrote (339)4/20/2003 11:07:31 PM
From: MulhollandDrive  Read Replies (1) of 4912
 
darfot:

set a price which induces complacency while maintaining cash flow.

but this does not mean the price will be in the 20s two or five years from now. that assumes a static situation. but the reality is not static. the House of Saud could fall and bring an immediate oil shock. and if that doesn't happen, it will be Chinese water torture of insufficient supply and growing demand.

another way to think of it is like this: the Saudis want to keep a certain market share. they can keep this share at $30 a barrel today. in ten years, they can keep the same share at a much higher price.

this was my point, obtuse, though it may have been.
but my reading (in general) for the saudi "sweet spot" price wise is more along the mid 20 price point..or at least it *had* been

so back to your original point that the saudis, due their financial needs, would begin jacking up oil prices leads to the obvious question..."from what price point"....will the saudis decreaseproduction (the only way, imo, that there is pricing power) at the mid teen or low 20's or will it be the mid 20's...

my understanding is that with current demand, the mid 20 price point is that which both the saudis and the u.s. can mutually "live with" (profitably)

btw...

"wanting to keep a certain market share" actually , imo, implies a need to maintain market share in the face of decreasing demand (or at the very minimum, growth of demand) which seems to coincide with a bearish viewpoint of contracting demand worldwide
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