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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: Win Smith who wrote (23691)	4/6/2002 12:29:04 PM
From: carranza2	Respond to of 281500

It's the Saudi's excess capacity which has imposed market discipline. It can flood the world with oil or shut off enough of it to make it painful for countries which depend on imported oil--and it can apparently do this on its own. When another supplier nullifies the ability to exert market discipline, things will change radically. SA is of course important. Will never be irrelevant. Its dominant position in the future is questionable.

To: Win Smith who wrote (23691)	4/6/2002 12:51:44 PM
From: BigBull	Read Replies (1) \| Respond to of 281500

During the 80's large deposits of oil were found and developed in the North Sea. These producers did NOT join OPEC. This production took market share from OPEC and added substantial new supply which helped keep prices low for almost two decades. It also placed much more pressure on SA as the swing producer which they came to resent deeply. This resentment was aggravated by extensive quota cheating within OPEC by it's members, primarily Kuwait, Venezuela, and Iran. Only $10 oil brought discipline back to OPEC. There are of course other major factors that influence oil pricing such as demand, which is reflected by the business cycle which is in turn affected by oil prices in a feedback loop fashion. With the de-Sovietization of the Russian oil fields, superior technology has been brought to bear, both in the exploration and production ends. This has enabled the Russians to increases production substantially. Which they have done. Russia no longer barters it's oil to "sattelites" so much of this oil (not used internally) will be exported. This does not even begin to factor in Caspian oil. I believe the reserves there are the size of North Sea oil, at the low end. The Russian have already constructed a large pipeline to get that oil out for export (and MOST Caspian WILL be exported.) Conclusion: OPEC is now facing a much larger problem in Kazakh and Russian oil than it ever faced with North Sea oil, even with increased consumption. Of course, that increased consumption will require a vibrant world wide economy, something terrorism and embargoes have a proven deleterious effect on. One thing Arab producers will also have to weigh very carefully in substantially reducing their revenues while other gobble market share is the restiveness of their own populations.