Saudis Vow to Ignore OPEC Decision to Cut Production

Source: The New York Times

By JAD MOUAWAD
September 11, 2008

VIENNA — Hours after suffering a rare setback at OPEC headquarters, where the cartel said its members needed to lower production to keep prices from sinking below $100 a barrel, Saudi officials assured world markets on Wednesday that they would ignore the decision and continue to pump as much oil as needed.

The marathon late-night session here illustrated the new pressures and power politics at play in the group that controls 40 percent of world oil production — and how ineffective the cartel can be. The meeting might be a harbinger of things to come, as OPEC faces its most difficult challenge in years: how to respond to falling prices in a weakening and uncertain global environment.

The Saudis made their strategy clear in informal talks and briefings with oil industry analysts and reporters, but as is their custom they would not speak for attribution because they did not want to appear to undermine a collective decision by OPEC that they endorsed publicly.

The confusion surrounding the meeting briefly slowed the decline in prices as oil markets tried to untangle the cartel’s byzantine decision. But thanks to the Saudi assurance and lower consumption data, oil for October delivery declined 6 cents, to $103.20 a barrel on Wednesday afternoon in New York. The price has dropped 30 percent since its July peak of $147.27.



Read more: http://www.nytimes.com/2008/09/11/business/worldbusiness/11oil.html?_r=1&partner=rssnyt&emc=rss&oref=slogin

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I think this open split in OPEC is very significant, and likely reflects strong US pressure on the Saud Family. Other DUers have thoughts?

OPEC may end up making more money if they'd just up production letting their oil get purchased in mass amounts before it becomes much less utile, well less necessary, in 20 years.

OPEC should maintain a high oil price to force those who don't want to seek alternative fuels to change their minds. Cutting production would increase the time that the oil will last, remember that oil is a non renewable natural resource and it is used to produce other materials not just gasoline.

This is the way it's been for the entire bush residency. However, if I were OPEC, I'd lower production new to cut the speculators out of the equation. That's what the whole point of why OPEC is doing this.

His year, however, the price increases were much greater than in previous years. Wait till next summer. $6 anyone? $6.50 probably.

there is no honor among cutthroats