Monday, May 10, 2004

The posturing before the June OPEC meeting begins.
Saudi oil minister Ali Naimi urged OPEC on Monday to raise its production ceiling by 1.5 million barrels a day when it meets on June 3. . . . Naimi's statement represents a shift in Saudi oil policy. Only in March the kingdom was reportedly the chief advocate of a decision by the Organization of Petroleum Exporting Countries to cut production in anticipation of a lower demand for oil during the spring and summer.
Some OPEC countries have publicly begun to question the cartel's traditional $22-28/bar. price band target, urging OPEC to raise the ceiling well into the $30s/bar. Just as clearly, the US wants oil prices back down into the $20s/bar. We shall see how well the Saudis play their assigned role as US interlocutor next month.

And remember the statement from Prince Bandar to Washington Post reporter Bob Woodward released last month and discussed by the two on Larry King in which the Prince and Woodward say
WOODWARD: That's not my story. What I say in the book is that the Saudis, and maybe you looked at this section of the book, Ambassador, that the Saudis hoped to keep oil prices low during the period for -- before the election, because of its impact on the economy. That's what I say.

BIN SULTAN: I think the way that Bob said it now is accurate. We hoped that the oil prices will stay low, because that's good for America's economy, but more important, it's good for our economy and the international economy, and this is not -- nothing unusual. President Clinton asked us to keep the prices down in the year 2000. In fact, I can go back to 1979, President Carter asked us to keep the prices down to avoid the malaise. So yes, it's in our interests and in America's interests to keep the prices down.

KING: Do you want President Bush...

BIN SULTAN: But that was not a deal.

KING: Do you want President Bush to be reelected?

BIN SULTAN: We always want any president who is in office to be reelected, Larry, but that is the American choice. This is not our call. This is the American people's call.
Looks like the Saudis are living up to their word -- starting to bring oil prices down in the third quarter, thus providing a more amenable economic context for Bush's re-election.

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