Saudi Arabia Says No to Cutting Oil Production
Saudi Arabia continues to be a thorn in the foot of the West’s public enemies such as Iran and Venezuela. The two oil producing and exporting countries had called on all OPEC countries to adhere to its quotas and to stop “oversupplying” the market. Especially Saudi Arabia was criticized; it produces some 500,000 barrels of oil more per day than its quota allows it to.
The Kingdom ruled by the House of Saudi, however, made perfectly clear on Tuesday it was not willing to cut production in any significant way.
“We have worked very hard since June’s meeting to bring prices to where they are now. I think everything is in balance,” Saudi Arabia’s Oil Minister Ali al-Nuaimi said.
Iran, Venezuela and other OPEC members believe that overproduction has caused the prices of oil to go down. The West, these countries believe, could pay more for oil than it does now, as long as OPEC would keep production in line with demand.
Saudi Arabia disagrees, arguing that there is a certain price that is acceptabe; $150 a barrel is not it. $100, on the other hand, is.
It is clear that one of the main reasons the Saudis push down the prices of oil is its dependence on and marginal support for the United States. The two countries have worked with each other for decades. The U.S. economy suffered tremendously in recent months, partially because the prices of oil had increased dramatically. In order to keep its economy alive the US needs the prices of oil to be as low as possible.
The Saudis are really getting the best of all worlds here. They get the high price of oil from the rest of OPEC maintaining $100+/barrel oil, they get the extra revenue from selling a lot of oil at this high price, and they maintain their close ties to the most powerful country in the world.
It’ll be interesting to see how OPEC responds. I mean in theory they should just be kicked out of OPEC. What’s the use of collective bargaining if you don’t act as a collective?