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To: Fun-da-Mental#1 who wrote (48329)	7/22/1999 8:11:00 AM
From: ItsAllCyclical	Read Replies (2) \| Respond to of 95453

OT - Funny I was mostly ridiculed for mentioning gold a month ago. Seems like the gold bugs have been multiplying...

To: Fun-da-Mental#1 who wrote (48329)	7/22/1999 8:22:00 AM
From: Crimson Ghost	Respond to of 95453

With turmoil in iran and Saudi Arabia apparently still in financial difficulty crude could go higher than most expect. From Stratfor today: 1700 GMT 990721 Saudi Arabia Reportedly Still Broke The opposition "Movement for Islamic Reform in Saudi Arabia" website reported on July 20 that Libya has offered to loan Saudi Arabia $3 billion in exchange for Saudi Arabia's assistance in lifting UN sanctions and unfreezing Libyan assets. The website claimed that Libyan leader Moammar Khaddafi made this offer after Saudi attempts to secure loans from Kuwait, the United Arab Emirates and other Gulf countries had failed. The real significance of this report does not lie in the alleged source of the loan offer. It is entirely reasonable for Libya to seek relief from its economic and political isolation, even if it must purchase support. If this says anything new about Libya, it is that Khaddafi may have got over his "I am African" snit and is attempting to mend relations with the Arab world. However, if these allegations are even remotely true – the Saudi opposition is not the least biased of sources – they say a great deal about the economic, and therefore political, stability of Saudi Arabia. With the price of oil depressed and a projected combined budget deficit for 1998 and 1999 of no less than $25 billion, Saudi Arabia was forced to seek its first ever foreign loan from the Sultan of Brunei in January of this year. Yet despite that loan, the implementation of austerity measures, and the fact that oil prices have rebounded to just over $18 a barrel, Riyadh is apparently still in need of loans. The Saudi ruling family has maintained power in a country of historically hostile tribes and religious minorities thanks in large part to its generous redistribution of the country's oil wealth. If that surplus has shrunk to the point that Riyadh is seeking loans from neighboring states, then the royal family's grip on power may be in jeopardy. That does not mean the Saudi government will fall; it still has several options. If it cannot coax loans from fellow Moslem governments, Riyadh can still float bonds on the international market. It would prefer not to do this, since international lenders charge interest, something condemned and rejected as usury in Islamic states. Riyadh can also increase policing of potentially hostile groups, though increasing pressure on the opposition could generate increased hostility in return. And finally, Riyadh can always abandon production control measures and surge production. This final strategy risks driving down prices below the point at which Saudi Arabia's increased production generates increased profits, not to mention the hostility it would generate from Saudi Arabia's oil-producing neighbors.