Strictly: Drilling and oil-field services Message Board

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Gold/Mining/Energy : Strictly: Drilling and oil-field services

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To: Brent Hogenson who wrote (39115)	3/7/1999 8:43:00 AM
From: John Carpenter	Read Replies (1) of 95453

I disagree with the Economist article because the Saudis have never pursued an overproduction policy for a very sustained period. Sure, being the swing producer, they have punished cheaters in the past. They even called for 10% production increases a year and a half ago. But of course they didn't stick to this strategy because the current round of cuts was meant largely to reverse the mistake of the 10% across the board production increase. So something has stopped the Saudis from going all the way and just flooding the market indefinitely. I don't know what stops them - fear of civil unrest, inability to finance the welfare state or just fear of short term pain. The Saudis have been afraid to go all the way and pump like crazy for several years straight. Unless the Saudis overcome their fear of sustained overproduction, I can't see how we get to $5 oil.

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