The Saudi Royals are turn this way and that these days -- but one can hardly have any sympathy for them. At the moment they are desperate to do something to help Bush/Cheney retain power in the U.S. On the other hand they are also desperate to do what they can to head off further pressures to 'reform' their society according to U.S. and Israeli designs regardless of which of the two parties in the U.S. control Washington.
Saudis spearhead attempt to dampen oil prices
By Kevin Morrison in London
Financial Times - August 4 2004
The world's largest oil producers intervened on Wednesday to try to cool oil prices, as Opec reassured customers it could raise output and Saudi Arabia, its biggest member, turned on the taps at two new fields ahead of schedule.
However, the effort did little to reverse the recent sharp rise in oil prices, which set new records in both the US and European key benchmark crude futures on Wednesday. Prices declined only slightly following the announcements from Opec and Saudi Arabia, suggesting that the oil cartel's ability to influence oil markets has been undermined.
Purnomo Yusgiantoro, the Indonesian holder of Opec's rotating presidency, said the oil cartel had spare production capacity of between 1m and 1.5m barrels a day. Most of this idle capacity lies in Saudi Arabia, which announced it had started production at two new fields three months earlier than planned.
However, Opec's spare capacity accounts for less than 2 per cent of current global production, and provides only a small cushion against possible supply disruptions due to terrorist activity in the Middle East, or from the Kremlin's battle with Yukos, Mikhail Khodorkovsky's Russian oil company.
Saudi Aramco, the kingdom's national oil company, said the new fields should eventually boost the country's output capacity by 800,000 barrels a day. Saudi Arabian oil officials have previously said that much of their new production from new was due to replace older wells, which were depleted, and the mothballing of other oil fields. However, they said the closure of the older fields may now be delayed in light of the strong demand for crude.
Concern about oil supplies keeping pace with global oil consumption, which is rising at its fastest pace in 24 years, pushed benchmark Brent crude futures to a record $40.99 a barrel yesterday, exceeding the previous peak of $40.95 reached in October 1990, in the lead up to the Gulf war.
US benchmark crude futures hit another record for the fourth consecutive day when the price touched $44.34 a barrel. However prices retreated after the latest US crude inventory report, which showed a drop in US oil imports. Brent crude dropped 19 cents to $40.48 a barrel in late London trade, and US crude futures fell 55 cents to $43.60 in early afternoon New York trade. “I think prices might be overdone, and we could see prices come back, but only by about $2 at the most,” said Christopher Bellow, an oil trader at Pru-Bache in London.
Record prices over the past month and near record imports of oil into the US are expected to result in another large import bill for the US, the world's largest oil consumer. Recent months have resulted in US crude import bills of more than $13bn, a figure that energy analysts expect to be exceeded for July.