Saudi Officials Seek to Temper the Price of Oil (around $50 a barrel NYT)

[Omaha Steve]

http://www.nytimes.com/2007/01/28/business/28oil.html?ex=1170565200&en=efd75c81a47dd906&ei=5043&partner=EXCITE

Saudi Officials Seek to Temper the Price of Oil

BY JAD MOUAWAD
Published: January 28, 2007

Saudi Arabia, which benefited immensely from record oil prices last year, has sent signals in the past two weeks that it is committed to keeping oil at around $50 a barrel — down $27 a barrel from the summer peak that shook consumers across the developed world.

The indications came in typically cryptic fashion for the oil-rich kingdom. In Tokyo last week, Ali al-Naimi, the Saudi oil minister, said Saudi Arabia’s policy was to maintain “moderate prices.” The previous week, on a stop in New Delhi, he effectively put his veto on an emergency meeting of the Organization of the Petroleum Exporting Countries to prop up prices after oil briefly dropped below $50 a barrel, the lowest level in nearly two years.

The events that propelled oil prices above $77 a barrel last July, then dragged them down again, were beyond the control of any single producer. Still, Saudi Arabia, which is by far the largest oil producer within OPEC and sets the cartel’s agenda, is seeking to avoid a repeat of the dramatic rise in prices while trying to put a floor beneath them.


Sondeep Shankar/Bloomberg News

Ali al-Naimi, minister for petroleum and mineral resources of Saudi Arabia, at a January 17 press conference in India.


Nowhere was last summer’s spike in oil prices felt more profoundly than in the United States. As gasoline rose above $3 a gallon, consumers cut their spending elsewhere, tamping down profits in retail, travel and other industries. United States automakers were devastated as consumers fled from large vehicles to smaller ones, which have historically been the specialty of the Japanese; on Thursday, Ford said that 2006 had been the worst year in its history.

FULL story at link.

[bahrbearian]

1. Will Chimpy and Snarly let that happen.. good luck with that.

[no_hypocrisy]

2. Why? Is the real reason b/c the "terrorists" are complaining about

their cuts coming up short for about six months?

[Tatiana]

3. Many DUers predicted this weeks ago.

And they also said that despite Chavez's wishes to see higher oil prices per barrel, the Saudis will simply flood the market with their oil to keep the prices low.

My question is, what are the Saudis getting out of this?

[Omaha Steve]

5. Do the math

$50 a barrel x millions of barrels a day. A depression from high prices means they loose business.

[CJCRANE]

6. My guess is there's a cutoff point

after which demand drops because people can't afford it and start tightening their belts.

$50 a barrel is probably the sweet spot.

[Strelnikov_]

4. Then why are they cutting production?

Or is production cutting them, with this simply being another self-serving statement to buy time before the truth of the state of their resource becomes apparent?

http://biz.yahoo.com/ap/070126/oil_prices.html?.v=15

Oil prices rose more than $1 to settle above $55 a barrel Friday on concerns that producers were complying with OPEC's production cuts and on expectations of continued blustery weather in the northeastern United States.

. . .

Tank tracker Lloyds Marine Intelligence Unit said Friday that oil exports from the Organization of Petroleum Exporting Countries fell to less than 23 million barrels a day in December from just under 24 million barrels a day in November, according to a Dow Jones newswire report.

Saudi Arabia, the world's largest crude oil producer and exporter, was the quickest to implement OPEC's production cuts; its exports in December were 1.1 million barrels a day lower than before the OPEC's October call for production cuts.