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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: IQBAL LATIF who wrote (32090)	7/4/2000 7:14:47 AM
From: IQBAL LATIF	Read Replies (1) \| Respond to of 50167

<<Saudi Oil Output Plan Stuns Rest of OPEC>> Idea thread highlighted soon after OPEC meeting that this is not over .... <<The oil equation is little distorted as a result of low inventories and I think and agree with the analysis that the present rise has more to do with the speculators who think refiners will soon be in the market to bid the oil higher in my opinion refiners will wait with 700,000 plus barrels and 150,000 to 250,000 from Mexico the demand supply equation will soon balance, whatever Saudis say as a swing producers with additional capacity they will like oil to stay below 30$ so as to avoid long term fringe producers problems that may bring the oil prices crashing down if oil stays above 30$.>> Message #32090 from IQBAL LATIF at Jul 4, 2000 3:58 AM According to Wall Street journal in a seperate report Crown Prince Abdullah had directly ordered to raise the output outside of OPEC quota..( as King Fahd is ailing Abdullah as Crown Prince has great influence on the politics of oil, politically this also signals the loss of control of Sudeiris seven and warming up of Abdullah with US and Yemani gaining influence with Abdullah, he was shunned by Fahd who is eldest of the sudeiris seven, the seven sons of King Saud from the clan of Sudeiris.. Crown Price Abdullah is out of that clan..that includes Sultan and Bander ) The long term interest of Saudis which is more important to Saudis than the short term gains is established...Yemani article and my other two post in this background where I highlighted that Yemani opinions will weigh high on Saudi heirerchy are within a week look very relevant. To see that wealth may be lost embedded in the ground if oil goes above 35$'s for a year, by keeping oil within 20-25$ band they delay fringe expensive producers and some what they buy time on lesser 'investment on alternate energy resources'... the complicated equation is like this 'once oil above 35$ they loose market share to alternative producers, the new investments in production facilities which are unbankable below 30$ price become attractive above 35$ and these new investments in medium term can later compete at lower level of 25$ after intial investment is written off'... <<Saudi Oil Output Plan Stuns Rest of OPEC By Michael Georgy LONDON (Reuters) - Stunned OPEC producers were left groping in the dark on Tuesday after a shock Saudi announcement that the kingdom was preparing to boost oil output. Just 10 days after an OPEC pact to raise output for the second time this year, the world's biggest oil exporter suddenly vowed to unleash more barrels to send oil toward the cartel's $25 target. Saudi Oil Minister Ali al-Naimi late on Monday announced through the official Saudi Press Agency that the kingdom would spearhead an increase of 500,000 barrels a day if high prices did not ease in the next few days. An OPEC source said Saudi Arabia -- OPEC's biggest producers and holder of vast spare output capacity -- was prepared to act alone if other producers did not have the oil muscle to deliver fresh supplies. Saudi Arabia holds most of OPEC's spare capacity. Kuwait and the United Arab Emirates are the only other cartel producers that can currently resort to spare capacity but their capabilities pale in comparison to the kingdom's. All fellow OPEC states could do when waking up to news of the Saudi statement on Tuesday was wait for the dust to settle. Iran, OPEC's second largest producer, refused to even acknowledge the official Saudi statement, saying reports of a possible unilateral output hike were ``not true'' and ``news hype.'' An Iranian oil ministry source, quoted by the official Iranian news agency, said that OPEC members who agreed to a production hike in a June 21 meeting had pledged to work together of future output policy. ``When an OPEC production increase has been legally determined, there is no reason to violate agreements and succumb to lawlessness and act unilaterally,'' the ministry source said. Saudi Arabia had made abundantly clear in recent weeks that it wanted to cut $5 a barrel from prices now at $30. But its new initiative was kept under wraps, even over the weekend when Saudi Crown Prince Abdullah and Kuwait's Emir Sheikh Jaber al-Ahmad al-Sabah sealed a border deal and later performed a traditional Gulf Arab sword dance to celebrate the agreement between the close regional allies. ``I have no knowledge about this issue,'' said Kuwait's Oil Minister Sheikh Saud Nasser al-Sabah on Tuesday morning. ``We work with the OPEC consensus...This requires consultations with other producing countries,'' added the Kuwaiti minister, who met with Naimi during the weekend festivities in Kuwait. OPEC's Venezuelan President, Ali Rodriguez, said he had no knowledge of the Saudi plan. Some In Opec Applaud Saudi Move Privately however, senior delegates from some member nations applauded the Saudi move. ``The market needed a clear signal that stocks would be replenished,'' said a delegate from an Arab OPEC member nation. ``We think it is a very good thing as high prices were not good for us. But we do hope and expect that when prices fall toward $25 the Saudis will quickly withdraw their 500,000 barrels,'' he added. The Saudi decision also stirred emotion in Iraq, even though the country has no official OPEC allocation because of U.N. sanctions imposed for its 1990 invasion of Kuwait. ``This is totally unwarranted. It is against OPEC's decision,'' Iraqi Oil Minister Amir Muhammed Rasheed told reporters. ``We have all agreed that not a single country should violate any consensus within OPEC,'' he said. Non-OPEC Mexico was the one key producer not surprised by the Saudi move. An ally in managing the market in recent years, officials in Mexico say it was approached about lifting output but has made no decision yet.>>