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Gold/Mining/Energy : Oil & Gas Price Economics -- Ignore unavailable to you. Want to Upgrade?

To: jackie who wrote (109)	5/4/1999 5:27:00 AM
From: jackie	Read Replies (1) \| Respond to of 350

Latest update from Stratfor. While not there yet, this report will be placed here in its entirety: stratfor.com At this same web site, one can sign up for free updates sent via email to your personal id. The news: << STRATFOR's Global Intelligence Update May 4, 1999 Iranian-Saudi Consensus Holds Seeds of Major Regional Realignment Summary: Following his meeting with visiting Saudi Defense Minister Prince Sultan bin Abd al Aziz al Saud, Iranian President Mohammad Khatami said that there are no longer any outstanding differences between Iran and Saudi Arabia. This possible reconciliation between Saudi Arabia and Iran has serious political, military, and economic ramifications for the region. Analysis: Following his meeting with visiting Saudi Defense Minister Prince Sultan bin Abd al Aziz al Saud, Iranian President Mohammad Khatami stated on May 3 at a press conference in Teheran that there are no differences any longer between Iran and Saudi Arabia. Khatami said that the two countries now have a relationship based on friendship and cooperation. "The recent contacts between the two sides have resolved all problems and there is currently no hurdle for the two states to expanding their ties in all fields," said Khatami, who will travel to saudi Arabia later this month. If they are anything more than diplomatic hyperbole, Khatami's comments could signal a major shift in the relationship between the two states, with possible economic, political, and military implications for the whole Middle East region. Since the Iranian revolution, Saudi Arabia and Iran have been anything but regional allies. While Saudi Arabia traditionally backed strategic interests of the United States in the Middle East, Iran experienced international isolation due to its extremist politics and anti-Western orientation. The two countries' relationship has been shaped over the past two decades mostly by their mutually antagonistic geopolitical alignments. In addition, the relationship between Saudi Arabia and Iran, both major oil- producing nations and members of OPEC, has often been defined by the two countries' rivalry over their respective shares of the world petroleum market. If Khatami's declaration of rapprochement between Saudi Arabia and Iran is real, it would undoubtedly redefine the balance of power inside the 11-member OPEC. Iran, the second-largest OPEC producer, has criticized the production quota assigned to Saudi Arabia as excessive. The two countries have both battled for market share and struggled for revenues by quota-busting, which in turn has effectively eliminated OPEC's ability to implement any production control agreement to control oil prices. If Saudi Arabia and Iran are now able to eliminate their differences in their oil production strategies, then the situation inside OPEC would change dramatically. Together, the two countries produce 11,695,000 bpd of crude oil, 42.5 percent of the total OPEC production. The third-largest OPEC producer, Venezuela, currently accounts for about 10.8 percent of total OPEC oil production. Coordination between Saudi Arabia and Iran would help these two producers more easily influence OPEC production management, which could result in higher oil prices. >> Jack