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Gold/Mining/Energy : LUKOY The largest oil company in the world LukOil unknown -- Ignore unavailable to you. Want to Upgrade?

To: Fred Levine who wrote (892)	11/20/2001 12:07:46 PM
From: CIMA	Respond to of 914

OPEC Price War Won't Sink Russia November 19, 2001 stratfor.com Convinced they can no longer restore higher oil prices themselves, OPEC leaders adjourned their Nov. 14 summit by making a planned production cut contingent upon the actions of non-OPEC producers. This new strategy, which focuses almost exclusively on Russia, signals the opening round of a price war that will do more to hurt the oil cartel than to fell Russian production. Summary Oil prices fell about 10 percent after OPEC leaders refused to cut production at their Nov. 14 meeting. Instead, the Organization of Petroleum Exporting Countries chose to link any further cuts to proportional action by non-OPEC producers, specifically Russia. The cartel hopes to scare Russia -- a serious rival to OPEC mainstay Saudi Arabia and one that consistently balks at calls to stem production -- with the threat of a price war. But the organization does not recognize that Russia can withstand direct confrontation of this sort better than many of its own members. The result will be an OPEC-Russia price war that will send oil prices through the floor. Such a collapse would have disastrous consequences for all oil producers. But the worst effects will be reserved for states that are economically and socially dependent upon oil revenues. Taken as a whole, the OPEC states depend on oil as their primary export, hard currency earner and source of budgetary income. For many cartel members, dropping prices are a ticking time bomb beneath their regimes. -------------------------------------------------------------------------------- Note: this is an abbreviated version of a full-length STRATFOR report previously seen by our Members. To access STRATFOR's complete range of in-depth, objective intelligence and analysis on the globe, including our award-winning daily full text and graphics reports, click here and become a Member today!