For the first time in it's history, the Saudis were unable to get the other members of the OPEC oil cartel to agree to increase production to lower prices.
The meeting reportedly ended in considerable turmoil and acrimony, and Ali al-Naimi, the oil minister for Saudi Arabia was quoted as saying, "We were unable to reach an agreement—this is one of the worst meetings we have ever had."
The Saudis are OPEC's biggest producer, and normally have enough clout to sway the others to go along with them. But the meeting degenerated into a stand off between the Gulf Arab countries, who had undoubtedly trying to fulfill a request from the White House to get prices lowered before the oncoming election and anti-US forces in the coalition led by Iran and Venezuela.
In addition, Qatar has given support to the Libyan rebels fighting Mummar Khaddaffi's government, while the Saudis have angered Shi'ite Iran and Shi'te dominated Iraq by sending troops to support the Sunni Bahraini government against a Shi'ite rebellion.
Opposing production increases were Libya, Algeria, Angola, Ecuador, Venezuela, Iraq ( such gratitude) and Iran, and they had enough clout to oppose the Gulf states and prevent an agreement. The Saudis and the UAE are reportedly going to try unilaterally increase production.
Crude prices immediately spiked to $118 per barrel.
What this means in the political realm here in the US is that prices at the pump aren't coming down anytime soon,which definitely has an effect on President Obama's chances for re-election next November, since the Obama Administration still effectively has a de facto ban on offshore drilling.
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3 comments:
one other reason iran may be opposed to an increase would be it will keep russian oil at a premium.
having europe by the short hairs, they don't really need a reason to sell at a premium.
just to keep up appearances as it were.
china i'm sure has their own personal deal with the sudan.
I seriously doubt that they made any real effort to increase production. This may have been for show. I'm not sure. Also, its highly unlikely they are going to "fulfill a request from the White House" either. America is almost universially despised. As such, no one is going to want to fulfill any request from America. In addition, many of these regimes are on the ropes as it is. For their best chances of survival, they would likely want to distance themselves as much from America as they could.
As for Mr. Obama, he may need to make a decision. Is keeping the enviro-whackos happy more important than winning reelection. Ordinarily one would think winning reelection would be more important but we have a number of ideologues running things in America right now.
Simply opening up all of our own oil and gas reserves for drilling has more benefits for our economic and national security interests than any thing we are currently doing does. It has the added benefit of allowing us to have more leverage when dealing with OPEC. Right now we have none.
Oil at the beginning of 2003 was $33/bbl. Since then the oil price has tripled and world population has grown by 600 million.
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