Quietly, secretly, behind-the-scenes, the Saudi Royals have lined up with the US against their own people -- cowered by the US of course. US troops are using the country, US planes are using the skies, and the American empire has essentially commandeered Saudi oil. George W is intent in fact on letting oil prices run up, letting the Saudis 'cash-in' for being so helpful, and then in the pre-election time of 2004 pushing oil prices way down and infusing the economy in order to win a second term.
Saudis Stock Oil Reserve to Make Up for Iraq Loss
By NEELA BANERJEE
NYTimes - 18 March:
Saudi Arabia has amassed a reserve of nearly 50 million barrels of oil that it plans to use to compensate for possible disruptions of Iraqi oil exports if war erupts, according to a senior Saudi official and industry experts who have been told about the supply buildup.
"We have about 50 million barrels, most of it in the country," said the Saudi official, who spoke on the condition of anonymity. "We can tap into it immediately once there is a shortfall."
The Saudi stockpile has been built up over the last three months as oil prices have climbed near their highest levels in years. Calls have increased from various political quarters for the Bush administration to release oil from the United States Strategic Petroleum Reserve, which holds 600 million barrels of oil. So far, the administration has said it will let the Organization of the Petroleum Exporting Countries try to make up for any disruptions before tapping the strategic reserve. OPEC is led in effect by Saudi Arabia, the only country with spare production capacity that can be called on in case of supply disruptions.
"We will make sure there is enough oil in the market," the Saudi oil minister, Ali al-Naimi, said in a statement. "We have plenty of spare capacity."
In New York yesterday, the price of crude oil for April delivery settled at $34.93 a barrel, down 45 cents, on profit taking by traders. During the day, oil traded from $34 to $36.95 a barrel.
Industry analysts said Saudi Arabia probably felt compelled to increase production to back up assertions it has long made that it can take care of problems that buffet oil markets.
"It is in the Saudis' interest to produce oil and store some of it away, and the cumulative effect of that is a substantial reserve," said Lawrence J, Goldstein, president of the Petroleum Industry Research Foundation. "The Saudis know that sustained high prices weaken economic activity, decrease demand and encourage non-OPEC production. They want to see a predictable, stable oil supply."
Iraq has been exporting about 1.5 million barrels a day. The cushion the Saudis have built into their system could make up for about a month's disruption of those exports, although Saudi Arabia does not plan to draw down all 50 million barrels, the Saudi official said.
"The United States consumes about one million barrels a day of Iraqi crude," said Yasser Elguindi, a managing director at Medley Global Advisers, a New York consulting firm. "So I don't think it's by accident that the Saudis have these numbers."
A representative of the Saudi oil ministry declined to comment on the reserve. The Saudi official said that he had told members of Congress about the oil pool and that "the U.S. government is certainly aware of this."
"Our oil people have been talking to the National Security Council," he added.
But he said that Saudi Arabia took this step on its own, without arm-twisting by the White House. "You look around and make plans based on different scenarios," he said. "What if there is a war? So you increase capacity. But how do you tap into reserves immediately? You want to make sure that if there are disruptions, the oil markets are covered. The administration didn't say, `Gee, guys, can you do this for us?' "
A White House spokesman declined to comment last night.
Saudi Arabia is producing about 9 million barrels a day, the official said, or about 1.5 million more than its OPEC quota. The Saudis have about 1.5 million barrels of additional production capacity that they can bring on in less than several weeks, if the need arises, he said. Independent experts have estimated that Saudi Arabia is producing 9.2 million to 9.5 million barrels a day, with an additional one million barrels that can be called upon.
The Saudis have stored nearly all their reserve within their borders, the official said, rather than in installations they have in the Caribbean, Europe and the Far East. Saudi Arabia increased production when a general strike in Venezuela reduced exports from there to a trickle. But prices for oil have climbed so high that foreign companies are buying only enough Saudi oil for their immediate refining needs, not to build supplies, Mr. Elguindi said.
Rather than reduce output, the Saudis have continued to increase and store what has not been bought. Oil that would be shipped from Iraq at this point would reach the United States in about 40 days, and any Saudi oil sent to make up for disruptions would take the same amount of time. "Rather than going to Mina al Bakr, more tankers will come to Ras Tanura," the Saudi official said, referring respectively to an Iraqi oil terminal and Saudi Arabia's largest oil port. "But we're not going to paint the barrels yellow and say, `This is part of the 50 million barrels.' "
The Saudi official warned that despite the reserve and the prospect of OPEC and others producing all out, such preparations would not be enough to fully protect world oil markets from volatility.
"You're not going to have any slack whatsoever in the system if there is a setback in Venezuela, or a strike in Nigeria or damage to Kuwaiti oil fields, or if Saddam blows up his fields," he said. "From the point of view of oil, the timing of this war is just horrible."