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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: i-node who wrote (385429)	5/21/2008 6:35:43 PM
From: tejek	Respond to of 1575173

"Chris Skrebowski, Editor of Petroleum Review, said the awful truth is that Saudi Arabia cannot raise oil output much even if it tries. "The myth of Saudi spare capacity is convenient for everybody: it gives OPEC leverage, and it gives the West hope. "But Saudi reserves are secret. They have never been verified," he said. Mr Skrebowski said oil is soaring because output is falling in Mexico, the US, and the North Sea. Russia stunned the markets with a 1pc fall in first quarter in Russia. "We are running the system flat out,"he said. The jury is out on the durability of this oil rally." telegraph.co.uk

To: i-node who wrote (385429)	5/21/2008 6:37:35 PM
From: tejek	Respond to of 1575173

"The first possibility is that the Saudis could still pump 10 mbd or more today if they wanted to, but they are cutting back production and exploring like mad because they put an extremely high value on having 2-3 mbd of excess capacity. If so, the recent price behavior suggests that the reason they would seek such capacity is not because they want to stabilize the price, but because it puts them in an incredibly powerful negotiating position. For example, the ability at any time to flood the market could be used at an opportune moment to undercut expensive alternatives such as oil sands that require an oil price over $50. The second and more natural interpretation is even more disturbing: the mighty Ghawar oil field is already in decline, and the Saudis don't want anyone to know." theoildrum.com