Sounds to me like Irag has good reason to invade SA, as does Iran, Kuwait, and a bunch of other folks. Would Saudi's be on same path if they didn't have so many US flyboys as guests?
And could this oil situation have anything to do with our bombings of Iraq?
Ya just never know.
>Global Intelligence Update
>Red Alert
>February 5, 1999
>
>Saudi Arabia Claims "There is no Excess Oil Production"
>
>Summary:
>
>At the recent inauguration of Venezuela's President Hugo Chavez,
>the Saudi Arabian Minister of Petroleum and Mineral Resources met
>with the new Venezuelan Energy and Mines Minister in an attempt
>to resolve their differences over OPEC oil production quotas. The
>Saudi representative made the extraordinary claim that "There is
>no excess production on the world oil market, but rather excess
>oil inventory." Other members of OPEC -- including Iraq, Iran,
>and Kuwait -- have all publicly criticized Saudi policy regarding
>oil production quotas. Indeed, the Venezuelans, in a reversal of
>their own quota-busting policy, are now contacting non-OPEC
>producers in an attempt to rein in production. In spite of these
>efforts, we are facing significant overproduction over the short
>term as oil producing countries fight for market share in order
>to cover debt service.
>
>Analysis:
>
>During a meeting held on February 2 between Saudi Arabia's
>Minister of Petroleum and Mineral Resources, Ali Bin Ibrahim al
>Naimi, and new Venezuelan Energy and Mines Minister Ali Rodriguez
>Araque, al Naimi denied the existence of excess oil production on
>the international petroleum market. Visiting Caracas on the
>occasion of the inauguration of Venezuela's new President Hugo
>Chavez, al Naimi said, "There is no excess production on the
>world oil market, but rather excess oil inventory." Following
>his discussion with the top Saudi oil official, Rodriguez said
>that Venezuela would now initiate meetings with oil officials in
>Mexico, Norway, Russia, Colombia, and Ecuador to discuss a new
>strategy for shoring up sagging oil prices. The Saudi's new
>rigid stance regarding oil production seems to have prompted the
>Venezuelan Minister to exclude the Saudis from future
>negotiations. Apparently, the Saudis see no need to reduce
>production, nor will they promote any coordinated plan to enable
>other oil producers' to slash output. Saudi Arabia's retreat
>from the use of production cuts to resolve the critical issue of
>low oil prices is both an indication of the ineffectiveness of
>previous measures taken to improve oil prices, and a possible
>indication of a sea change in producers' market manipulation
>strategies.
>
>There are numerous indications that an OPEC resolution passed
>during its semi-annual meeting in June 1998 to cut a total of 2.6
>million barrels per day (bpd) from February 1998 levels is not
>being respected, despite the fact that this cut was extended
>during the November 1998 follow-on meeting. And with this
>failure to coordinate production, a major conflict among oil
>producers has emerged, which in turn has prevented new concerted
>efforts to reduce production. According to most recent oil
>industry surveys, OPEC output of 27.81 million bpd in January was
>up by 360,000 bpd from 27.45 million bpd in December of last
>year. Non-compliance with agreed oil-production quotas inside
>OPEC continues.
>
>Some Gulf oil producers are now accusing Saudi Arabia of having
>unleashed the current oil crisis by advocating an increase in
>OPEC's production quotas late in 1997, despite the Asian economic
>downturn, and for pumping excess oil today. For instance, Amir
>Muhammad Rashid, Iraq's Minister of Oil, sent a letter to Youcef
>Yousfi, who serves both as president of OPEC's ministerial
>conference and as the Algerian Energy and Mines Minister,
>demanding that the Saudis cut their production quota in line with
>the July 1990 agreement. Such reduction would not only bring
>Saudi oil output down to 6 million barrels per day, which
>represents about 30 percent reduction from its current production
>quota, but it would more significantly reverse the economic
>consequences for Iraq of the Gulf War. The Iraqis also issued a
>call demanding that all parties respect OPEC resolutions and for
>the adoption of new "flexible ceiling" that would take into
>consideration petroleum market fluctuations.
>
>Iran has also lately issued strong statements regarding Saudi
>Arabia's oil policy. On January 27, the English-language Iran
>News Oil quoted the head of Iran's parliamentary oil commission,
>Morteza Zarrin Gol, as saying that "Saudi Arabia has weakened the
>oil market and inflicted more damage on Iran with its oil policy
>than Iraq did during its 1980-88 war with Iran. Unfortunately,
>Saudi Arabia has played a key role in the weakening of the oil
>market and reducing oil prices." According to Zarrin Gol, Iran
>has always believed that Saudi Arabia's OPEC production quota
>(which is 8 million barrels as compared to the quota of 3.3
>million barrels assigned to the second largest OPEC producer,
>Iran) is excessive. Truly alarming from the perspective of the
>oil producing countries, however, were Zarrin Gol's statements
>regarding future developments inside OPEC. "I regret to say that
>there is no spirit of cooperation among OPEC member countries.
>All they want to do is eliminate their market rivals. This policy
>has worked only to the benefit of oil consuming countries," he
>said. Moreover, Zarrin Gol expressed skepticism that further
>production cuts by OPEC would have the desired impact on oil
>prices, claiming that such actions by OPEC would only lead to an
>increase in oil production by non-OPEC oil producers.
>
>Dissatisfaction and frustration with the lack of discipline
>inside OPEC is also growing among smaller OPEC oil producers. In
>late January, Youcef Yousfi and Kuwait's Oil Minister, Sheikh
>Saoud Nasser al Sabah, called for moving up by one month the
>planned OPEC meeting, which was originally scheduled for March
>23. This initiative failed due to the unwillingness by OPEC
>members to cooperate in implementing the organization's previous
>resolutions. According to the Kuwaiti daily Al-Watan on February
>1, Nasser al Sabah justified not rescheduling the meeting in the
>following terms, "Some oil-exporting countries have taken a clear
>position against non-compliance of production cuts by deciding
>not to attend any future OPEC meeting until it is confirmed that
>all members have fully complied with cuts. If there is going to
>be an OPEC meeting, it will not take place unless its aim is
>further reduction." Clearly the Kuwaiti Oil Minister is now
>prepared to up the ante on the other members on OPEC by holding
>future meetings hostage to a predetermined agenda.
>
>While Saudi Arabia, which is experiencing increased pressure to
>curb production by OPEC producers, has apparently decided to stop
>cooperating with efforts to stabilize oil prices by reducing
>output, the other major OPEC overproducer, Venezuela, apparently
>is moving in an opposite direction. The new Venezuelan Energy
>and Mines Minister, Ali Rodriguez Araque, seems to be more
>willing to cooperate with OPEC than his predecessor Ervin Arrieta
>was. Rodriguez announced recently that Venezuela will initiate
>"a very intense interchange with the OPEC and non-OPEC countries
>to secure an agreement aimed at generating a recovery in oil
>prices." Venezuela also intends to negotiate with such non-OPEC
>producers as Mexico, Norway, Russia, Colombia, and Ecuador.
>Given the apparent unwillingness of Saudi Arabia to discuss the
>issue of overproduction, the question is, whether any future
>concerted action could be expected from OPEC and other major oil
>producers. The prospects for reaching an agreement about future
>output cuts or even extending the existing ones are slim. OPEC's
>impotence has never before become so transparent.
>
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