. Energy News .

Saudi clout on oil questioned after OPEC
by Staff Writers
Beirut, Lebanon (UPI) Jun 23, 2011

Saudi Arabia's defeat by Iran over oil production levels at OPEC's June 8 meeting caused considerable dismay among consumer nations and hinted that Riyadh's dominance of the cartel was in doubt.

The Vienna setback followed a February disclosure in U.S. documents released by WikiLeaks that Washington was concerned that the kingdom wasn't able to pump enough oil to keep a lid on prices.

These have risen sharply since January when the Arab world was swept by unprecedented political upheaval and the loss of Libya's output of 1.2 million barrels per day because of civil war there.

At OPEC's ministerial meeting, Saudi Arabia, the world's largest oil producer, pressed for the cartel to boost production by 1.5 million bpd to 30.3 million bpd to curb oil prices that threatened to undermine efforts to recover from the global financial meltdown.

Iran, the kingdom's old rival, has long been hawkish about keeping prices high -- especially now that its economy is being squeezed hard by U.N. sanctions imposed a year ago over Tehran's contentious nuclear program.

"The acrimony that derailed … the meeting has wider implications than the short-term failure to agree a production rise wanted by Saudi Arabia but opposed by price hawks Iran and Venezuela," Financial Times commodities specialist Javier Blas wrote.

"It signals that Riyadh's moderate views on what should be the prevailing oil price carry less weight than in a group now more influences by Tehran and Caracas …

"The collapse of the meeting signals that a majority of the cartel sees oil prices above the $100 a barrel mark as a new floor, rather than ceiling," Blas cautioned.

He argued that in view of the Vienna decision, which in effect scrapped OPEC's production quota system, Saudi Arabia, along with Kuwait and the United Arab Emirates, would be free to produce as much as they want to moderate prices.

Blas observed that the Saudis could beef up their current output of some 9 million bpd, recently increased to cover the loss of Libyan production, to 10 million bpd.

That would pretty much account for Riyadh's capacity for swing production, removing the cushion the global oil market has counted on to counter unexpected supply crises.

The Vienna summit caused considerable unease in the industrialized world as it pondered the prospect of oil prices soaring back to their 2009 peak of nearly $150 a barrel.

None of this was good news for the Saudis, who are digging in to repel the pan-Arab drive for democratic reform.

The last thing the House of Saud wants is constitutional reform, particularly as it wrestles with what could be a messy crisis over who will succeed King Abdallah, who's believed to be 88 and recently underwent surgery in New York.

"It's not clear who has who over a barrel -- but the Saudi response is predicted to be a unilateral increase in production," observed Simon Henderson of the Washington Institute for Near East Policy.

"This might help U.S. gas prices but it means that Saudi Arabia will 'go it alone' instead of exhibiting world energy leadership."

That leadership has been under scrutiny for some time as the Saudis have to allocate more of their oil production to domestic consumption and keeping the country running.

In February, U.S. diplomatic cables released by WikiLeaks showed that in 2007 Saudi officials were warning that the kingdom may not have enough oil reserves to prevent prices escalating.

Sadad al-Husseini, former head of exploration with the state-owned oil monopoly Aramco, told U.S. diplomats the kingdom couldn't achieve the 12.5 million bpd production target to prevent prices soaring.

The Saudis, he said, had overstated their crude reserves, to spur investment, by as much as 300 billion barrels.

"Few governments …are likely to survive the economic dislocation that a sustained price of $200 a barrel would deliver," British commentator George Monbiot said in March.

"The production quotas assigned to OPEC states are a function of the size of their stated reserves," he wrote in The Guardian British daily.

"All members of the cartel have an incentive to exaggerate them. Saudi Arabia posts the same figure now that it did in 1988. Fact or fiction, who knows? The true condition of its oil fields is a state secret."

Related Links
Powering The World in the 21st Century at Energy-Daily.com

Get Our Free Newsletters Via Email
Buy Advertising Editorial Enquiries

. Comment on this article via your Facebook, Yahoo, AOL, Hotmail login.

Share this article via these popular social media networks
del.icio.usdel.icio.us DiggDigg RedditReddit GoogleGoogle

Philippines seeks US arms amid China tension
Washington (AFP) June 23, 2011
The Philippines said Thursday it hoped to lease naval equipment from the United States, calling for a "reset" in the two nations' alliance in the face of rising friction at sea with China. Foreign Secretary Albert del Rosario, in Washington for talks with Secretary of State Hillary Clinton, also indicated that the Philippines viewed the tense South China Sea as covered under its security tre ... read more

EU unveils energy efficiency directive

Why is 'Energy Roadmap' Being Hidden From US Public

Understanding mobility

US lightbulb rules spark new political fight

Green Planet Group Announces Initial Hydrogen Test Results

US says won't rule out options on Venezuela sanctions

Oil release a remedy for price spikes?

Sudan pipeline threat could spark oil war

Sheringham Shoal signs up For WindManager wind farm management system

PSC Allows Installation of Largest Land-Based Wind Turbines in NY

Olympic Steel Installs Wind Turbine

Siemens unveils wind turbine prototype

AREVA Solar Part of Consortium Selected for New 250MW Solar Flagships Project

Bosch planning new manufacturing site for solar energy in Malaysia

Real Goods Solar and Alteris Renewables to Merge

Solar Frontier Opens Office in Saudi Arabia

India to press ahead on nuclear power

China needs improved administrative system for nuclear power safety

Japan begins nuclear charm offensive

Westinghouse presents bid for Lithuania nuclear plant

Dynamic Fuels Supplies Renewable Jet Fuel for Commercial Flights

KLM to run planes on cooking oil

Boeing 747-8 Freighter Arrives at Paris After Historic Biofuel Flight

New biofuel sustainability assessment tool and GHG calculator released

China to launch new communication satellite

China's second moon orbiter Chang'e-2 goes to outer space

Building harmonious outer space to achieve inclusive development

China's Fengyun-3B satellite goes into official operation

Obama has failed to lead on climate: Gore

Atmospheric carbon dioxide buildup unlikely to spark abrupt climate change

Climate change disasters could be predicted

Poland blocks bolder EU climate emissions cut

Memory Foam Mattress Review
Newsletters :: SpaceDaily Express :: SpaceWar Express :: TerraDaily Express :: Energy Daily
XML Feeds :: Space News :: Earth News :: War News :: Solar Energy News

The content herein, unless otherwise known to be public domain, are Copyright 1995-2011 - Space Media Network. AFP and UPI Wire Stories are copyright Agence France-Presse and United Press International. ESA Portal Reports are copyright European Space Agency. All NASA sourced material is public domain. Additional copyrights may apply in whole or part to other bona fide parties. Advertising does not imply endorsement,agreement or approval of any opinions, statements or information provided by Space Media Network on any Web page published or hosted by Space Media Network. Privacy Statement