With oil prices falling, some members of OPEC would like to see price cuts to put upward pressure on crude. That would make sense. It would bring members of the cartel more money and stretch out the pace at which they need to ship their current reserves.
Venezuela, where the head of state Hugo Chavez seems to have no love for the U.S., has lobbied fellow OPEC members hard to dial back oil shipments. The Arab states may not be so eager. According to Bloomberg, "Saudi Arabia, the world's biggest producer and de facto leader of the 13-member Organization of Petroleum Exporting Countries, the United Arab Emirates, Qatar, and Kuwait may reject calls from Venezuela and Iran to trim supplies at its Sept. 9 meeting in Vienna."
Increased cash flowing into the Middle East is feeding sharp increases in inflation, but that may only be a small part of the reason behind the motivation to do nothing with fuel supplies.
Saudi Arabia and its neighbors know that extremism continues to grow in the region. They are also not geographically far removed from the trouble in Georgia. The nation, which is at "war" with Russia, is close to the norther border of Iran. In other words, there is more than one threat to stability in the region.
The United States keeps a tremendous military force in and around Saudi Arabia. The kingdom may not want to go any further than it has to alienate America.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
9-07-2008 @ 3:01PM
Ozzy Rules said...
"Columbia, where the head of state Hugo Chavez seems to have no love for the U.S., has lobbied fellow OPEC members hard to dial back oil shipments."???????
Um, don't you mean Venzuela? Which will vanish, my comment or your story? Like the one about the Who, where the writer referred to the song "Baba O'Riley" as "Teenage Wasteland". AOL wasted no time pulling that story after the "journalist" involved was called out on her error numerous times
9-07-2008 @ 3:32PM
Reed said...
Ummm... Columbia? I think you meant Venezuela.
9-08-2008 @ 10:51AM
david said...
What unprofessional journalism. Check you facts and for god sakes check your spelling!!!
What are you in high school?
9-07-2008 @ 3:36PM
Reed said...
Colombia would be the correct spelling.
The correct spelling of the country Hugo Chavez is actually in charge of is Venezuela.
Also, Colombia is not a member of OPEC to begin with.
SOLID news reporting here, folks.
9-07-2008 @ 5:23PM
moonie said...
Hmmmm
9-07-2008 @ 5:31PM
moonie said...
Best to stay the course better still let crude slow down even more the US more than needs a break from higher crude.Venezuela's Chavez has a one sided brain, he has no idea how much the US abhores his rhetoric thinking.one fine day when the US no longer needs or wants his crude Chaves will wake up and wonder hmm why don't the US TAKE MY CRUDE ANY MORE!The US will remember later the ones that gave them a break from crude and the ones that didn't.
9-07-2008 @ 6:04PM
Kent said...
Correct spelling is, "Colombia" ; not "Columbia". Georgraphy lessons have been down-graded at school, I see.
9-07-2008 @ 6:36PM
Andrew said...
Hugo Chavez is the President of Venezuela not Colombia. Muppet.
9-07-2008 @ 7:15PM
Keith said...
Saudi Arabia is going to cut oil prices? They just refused to cut oil prices after they cut production in order to increase prices. We have soldiers based in Saudi Arabia and Kuwait as a protective force against the threat from................ Saddam Hussein. He's not really a threat anymore yet our soldiers are there polishing their bayonets while other soldiers from home are going to Iraq and Afghanistan. Time to bring them home.