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Saudi Arabia Will Let Oil Reach $120, As Truth Behind Saudi Motives Is Exposed

Tyler Durden's picture




 

All those naively hoping that Saudi Arabia has suddenly developed some altruistic bent and will act against its own interest by increasing excess production (which according to Jim Rogers it simply does not have), to keep oil prices lower, are advised to reevaluate. According to CBS, citing "the conclusion of an internal report prepared by a major investment firm based on information from its extensive and knowledgeable contacts within OPEC" Saudi Arabia won’t take "significant steps to bring down the price of crude oil until Brent, the grade traded most on the open market, reaches $120 a barrel, about 8 percent above current levels." More from CBS: "In the report, which was made available to MoneyWatch on the condition that the firm not be named because briefings with its contacts are off the record, the OPEC sources reiterate their earlier analysis of the oil market, which has proven to be on the nose. They contend that the delicate political situation  across the Middle East and North Africa - including the fragile state of affairs within Saudi borders - is preventing the kingdom from doing the sensible economic thing and increasing production to keep prices under control." Which simply means that Rogers and all those doubting the veracity of Saudi's motives, not to mention the kingdom's rhetoric that it has boosted output to over 9 million bbls/day, have been correct, and the supply/demand dynamics of the stock market have been largely unchanged since Libya took over 1.6 million barrels of oil from the market.

More from CBS:

Saudi authorities were reported to have raised output late last week to compensate for supply disruptions in Libya, but if the investment firm’s sources are right, as they have been since unrest in the region was in its initial phase, the Saudi move may not be as big or as prolonged as many expect. The firm’s report indicates that Saudi leaders have other concerns that would persuade them to take less robust steps than usual to stabilize oil prices:

“The main threat is . . . Saudi instability when the current king dies. We know he is very ill but obviously there is no indication of how critical that condition is. But it is acknowledged that the next transition will present a much bigger threat to internal stability. . . . Vested interest groups have been waiting for this transition to push their agenda. Saudi experienced considerable regional instability up to 10 years ago but bought it off with higher oil-based spending. Today the problem is as bad, if not worse. There have been only a few of the promised reforms. . . . Resentment towards the wealth gap with the royals is very high. . . . Even if/when the instability in other countries, such as Libya, settles, the Saudi succession threat is now firmly on the table. What happens in Bahrain could be very key. That alone will keep the oil market nervous for this year.”

The investment firm predicts that $120 a barrel will provide greater resistance for buyers to overcome than $100 did. Still, it warns that as the price approaches that level, Saudi Arabia will be inclined to increase production “cautiously rather than aggressively.”

The report does not address the impact of $120 oil on stocks and bonds, but it probably would be harmful to both. And what if oil doesn’t stop at $120? If Saudi Arabia is beset by a succession struggle and/or something similar to what has happened elsewhere in the region and oil prices shoot past that level, the reaction in financial markets is likely to be severe.

As this story spreads, look for Brent to not go much lower from here as total chaos appears to be the underlying geopolitical thesis yet again.

 

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Tue, 03/01/2011 - 10:12 | 1006748 slow_roast
slow_roast's picture

Black Gold bitchez!

Tue, 03/01/2011 - 10:21 | 1006769 unwashedmass
unwashedmass's picture

 

unless the "unnamed source" with the extensive contacts is GS and they are just lining up some rape victims.

Tue, 03/01/2011 - 12:15 | 1007180 tsx500
tsx500's picture

NOOOOO .......... they would NEVER do that  !    

Tue, 03/01/2011 - 10:40 | 1006813 brian0918
brian0918's picture

I love how it takes an "internal report by a major investment firm" to confirm that people operate according to the profit motive.

Tue, 03/01/2011 - 10:53 | 1006846 tmosley
tmosley's picture

Individuals do.

Governments, not so much.

Tue, 03/01/2011 - 10:59 | 1006867 brian0918
brian0918's picture

Politicians are certainly out for profits - but they do it through coercive means.

Tue, 03/01/2011 - 11:30 | 1006999 DaveyJones
DaveyJones's picture

and criminal

Tue, 03/01/2011 - 14:26 | 1007909 Citxmech
Citxmech's picture

Of course Governments seem pretty willing to bend their respective populations over for certain individual's profits.

Tue, 03/01/2011 - 10:12 | 1006751 gwar5
gwar5's picture

Been stocking up. That's why I have 55 gal barrels out back.

Tue, 03/01/2011 - 10:13 | 1006752 Slartebartfast
Slartebartfast's picture

Another rumor from hidden sources courtesy of the CIA.  OIL MUST GO OVER $200.  US DOLLAR MUST FAIL.  Signed, the Baron of the EE.

Tue, 03/01/2011 - 10:14 | 1006754 SheepDog-One
SheepDog-One's picture

Yea, but ya cant eat barrels of oil.

Tue, 03/01/2011 - 10:22 | 1006772 rocker
rocker's picture

Leaks out of a safe too.  Shit.

Tue, 03/01/2011 - 10:46 | 1006828 Joe Sixpack
Joe Sixpack's picture

Just bury it in the backyard. That's what they did millions of years ago.

Tue, 03/01/2011 - 11:18 | 1006941 Gert_B_Frobe
Gert_B_Frobe's picture

One step ahead. Bought a bunch of bags of Kingsford charcoal on sale at Home Repo and buried them in the backyard.

Yep. 1 billion years from now my decendents are gunna be sittin' pretty with diamonds.

Tue, 03/01/2011 - 10:16 | 1006759 Josh Randall
Josh Randall's picture

Awesome - now we can justify all those crappy new go karts...errr..cars from Government Motors made in China

Tue, 03/01/2011 - 11:00 | 1006866 New_Meat
Tue, 03/01/2011 - 15:25 | 1008154 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Consumer Reports: GM's Volt 'doesn't really make a lot of sense'

Yep, no shit. I could have told you that a $40,000 car that can only go 400 miles per plug-in/fill up with extra parts to break is not going to work. Remember, they have to please the religious environmentalist crowd. Reality is pointless.

Tue, 03/01/2011 - 10:16 | 1006760 Popo
Popo's picture

$120 oil is going to put a serious dent in earnings...  (And of course, consumer spending)

Tue, 03/01/2011 - 10:17 | 1006763 Oh regional Indian
Oh regional Indian's picture

Oil to $200.

USDX to 50...

The possibilities, on the up and down side, are limit-less.

Buy, hold, pray, exercise, focus, relax...

;-)

ORI

http://aadivaahan.wordpress.com/2011/02/25/wisdom-for-warriors-7/

Tue, 03/01/2011 - 10:24 | 1006777 cossack55
cossack55's picture

You forgot:

Dow 36,000

S & P  2900

NASDAQ  21,000

Tue, 03/01/2011 - 10:50 | 1006833 Oh regional Indian
Oh regional Indian's picture

Cossack, having been in the heart of the .con bubble, in the Vally of silicone, back in the day, that Nasdaq 21,000 hurts the worst. I remember praying for it then... :-)

ORI

Tue, 03/01/2011 - 10:18 | 1006767 johnnymustardseed
johnnymustardseed's picture

This will end badly, they will soon end the peg in dollars

Tue, 03/01/2011 - 11:24 | 1006973 BigJim
BigJim's picture

Not with all that US military hardware pointing at them.

Tue, 03/01/2011 - 11:27 | 1006990 MachoMan
MachoMan's picture

They need protection...  What are they going to change to, gold?  How long will we be able to buy oil with that?  Then what?  They'll stay put until they're scared enough to leave...  then we'll have to convince a whole new set of people to let us take our liberties with their hind ends.

Tue, 03/01/2011 - 10:21 | 1006770 Judge Judy Scheinlok
Judge Judy Scheinlok's picture

The Rally Monkey is long crude, video at 11:00.

Tue, 03/01/2011 - 10:21 | 1006774 the not so migh...
the not so mighty maximiza's picture

Time to get a moped with a flashing orange light on top of helmet

Tue, 03/01/2011 - 10:25 | 1006779 MiddleMeThis
MiddleMeThis's picture

If they would stop mixing ethanol in my petroleum, I wouldn't mind as much.  But the 90/10 petroleum/ethanol mix has decreased my MPG efficiency by 3-4 mpg.  Enough already.

Tue, 03/01/2011 - 10:29 | 1006789 cossack55
cossack55's picture

Soon to be 85/15

Tue, 03/01/2011 - 10:43 | 1006815 falak pema
falak pema's picture

If it was 'Monsanto' ethanol the drop would be the double. You would also find green GFM (genetically fabricated through modification)  trolls in your tank!

Tue, 03/01/2011 - 10:28 | 1006783 alter ego
alter ego's picture

Hi my friends.

Watch out for those angry trolls who jump to

post every time there is a news related to Peak

Oil.

This is truly an inconvenient truth, the type of

one that the powers that be don't want you to

discuss in important forums or main stream

media.

 

For those universally ignorant that says we are

not running out of oil since there is deep

drilling in Russia that probes the otherwise, I

tell you one thing.

We are not running out of oil, we are just

running out of the oil that we can "afford" to

burn

 

In order to have this non conventional form of

oil coming and flowing we need a type of

economics that allow you to invest millions and

millions of dollar to get that energy, it means

that triple digit oil prices has to happen in

order to maintain the flowing of the black stuff.

Those tripple digit oil prices are the ones who

produce energy shocks, therefore the

produce economic recessions. 

Tue, 03/01/2011 - 10:46 | 1006829 Pants McPants
Pants McPants's picture

Thanks.  Please let me know when those, uh, trolls show up.

Tue, 03/01/2011 - 10:52 | 1006844 MolotovCockhead
MolotovCockhead's picture

There's a conpiracy to drive the price of oil much higher. TPTB want to make sure that the jobless hungry mobs can't afford to buy the gas needed to make their molotovcocktail when all hell break loose. A hungry man is an angry man!

Tue, 03/01/2011 - 10:29 | 1006785 Quintus
Quintus's picture

$120?  Seems fair.  The Bernank reduces the value of the dollar by 8%, so the Saudis ask for 8% more of them in return for a barrel of oil.  Who could quibble with that?

Tue, 03/01/2011 - 10:31 | 1006793 Shameful
Shameful's picture

How about us poor slobs who are not getting pay raises or bonuses commensurate with Zimbabwe Ben's Wild Debasement Ride?

Tue, 03/01/2011 - 10:34 | 1006800 Quintus
Quintus's picture

Sorry - I was attempting to be sarcastic.  This is just another confirmation that the Fed cares little, if at all, about the working people of the US, and indeed the world.  If the price of saving his Wall St. masters is $120 oil, or $220 oil for that matter, it's a price worth paying in his eyes.

Tue, 03/01/2011 - 10:41 | 1006812 Shameful
Shameful's picture

Well that's just it I can't blame the oil producers for wanting more.  The easy oil is getting pumped and I totally understand wanting to get more debased dollars for it.  Problem is, like always, the serfs are getting caught in the crossfire.  I for one can't wait for the petrodollar to die.  Sure oil prices will sky rocket for the US and kick me in the teeth, but at least it will force the sleeping masses to stir in their slumber and ask "WTF just happened?!?!"

Tue, 03/01/2011 - 14:25 | 1007903 downrodeo
downrodeo's picture

At that point, I believe, we will see the perfect opportunity to truthfully explain exactly what did happen. There is no doubt in my mind that the TPTW will have a plethora of 'explanations' to choose from, and will attempt to insert their own narrative in order to make sure we keep on sleeping on. This will be the most dangerous time for them, and as a direct corollary, the most dangerous time for us as well.

Tue, 03/01/2011 - 10:34 | 1006803 samsara
samsara's picture

Wages goes up linear

Interest goes up geometric

Tue, 03/01/2011 - 10:41 | 1006811 Judge Judy Scheinlok
Judge Judy Scheinlok's picture

You slobs need a .gov job or convert to jewish so the world is your oyster.

Meantime $120 crude means lots of potential investors for US debt. Yea! $120 crude is good for equities afterall.

Tue, 03/01/2011 - 10:31 | 1006787 Sudden Debt
Sudden Debt's picture

Higher oil will to wonders to the Chinese inflation :)

 

I wonder how long before they go ALL BRUCE LEE ON THEIR GOVELMENTS!!

 

Tue, 03/01/2011 - 10:48 | 1006832 falak pema
falak pema's picture

The day you go RAMBO on yours. Don't forget you have an advantage over them : you have a maestro playing QE-forever, Benocide, who will not only create mega-inflation but definitely tank USD and economy for nothing...Maestro...is not going to change his tune...by the looks of it.

Tue, 03/01/2011 - 11:10 | 1006906 Larry Darrell
Larry Darrell's picture

Pretty sure our friend Sudden Debt is from Belgium, so he doesn't have the "maestro" Ben.  Also, I'm not even sure his country has a functioning government at the moment.

Tue, 03/01/2011 - 10:30 | 1006788 props2009
props2009's picture

Must read guys

Pentagon says: Financial Terrorism behind Wall Street collapse

http://dawnwires.com/uncategorized/terrorist-attack-behind-the-crash-of-...

 

They have blamed everyone except the insiders in US.

 

Tue, 03/01/2011 - 10:32 | 1006798 Sudden Debt
Sudden Debt's picture

AL QAIDA DID IT!!!

 

Looks like Kadafi was right all along...

 

Tue, 03/01/2011 - 10:47 | 1006830 sushi
sushi's picture

It was the schwarma vendor with the hot pickle on Rector Street.

Tue, 03/01/2011 - 12:43 | 1007334 melachiro
melachiro's picture

Man I miss schwarmas; it would almost be worth going back to the House of Saud just to have a few.........mmmmmmmmmmmmm

Tue, 03/01/2011 - 16:50 | 1008683 Citxmech
Citxmech's picture

Schwarmas are awsome - but they sure do give at both ends.  Worst gas I ever had was because of one of those things.  Buyer beware!

Tue, 03/01/2011 - 10:29 | 1006790 Rusty Shorts
Tue, 03/01/2011 - 10:31 | 1006791 John McCloy
John McCloy's picture

Forget 120..I'm looking for a new all time high. Ben did not like the last selloff not taking down silver and commodities. 155 oil may be just his ticket to getting a QE3 out the door.
Expect another Selloff below 12,000 to try to supress Silver prices.
$50.00 silver makes for good mainstream headlines and we cannot let the serfs get any bright ideas about preserving their wealth. Remember we are dealing with the greatest price fixing experiment of all time.
Ben needs buyers of treasuries, lower input costs and Silver down. If he must he will take the market down.

Tue, 03/01/2011 - 10:35 | 1006804 Shameful
Shameful's picture

Why not take the market down?  The Pigmen can get a heads up and go short into the maelstrom.  Zimbabwe Ben gets WE3, and the ponzi moves on.  While at the same time get to try to scalp the commodity (and PM) longs.  With QE3 can ramp the market back up, just need a convenient excuse to force a sell off.  With the current geopolitical situation I think that they can just pick one of the weekly crises to trigger the take down.  "We don't know what happened!  Early investigations point to Waddel and Reed selling some futures..." or "Oops butterfingers!  Sold billions not millions, but man B and M are so close..."

Tue, 03/01/2011 - 13:36 | 1007644 gdogus erectus
gdogus erectus's picture

Nice - thinking like them.  Very nice.

Tue, 03/01/2011 - 10:37 | 1006805 the not so migh...
the not so mighty maximiza's picture

I think your right. 200 oil for some reason keeps whispering to me.

Tue, 03/01/2011 - 10:30 | 1006792 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Yet they will be spun as bad guys for minding their own TR (being bad humanitarians besides this point).  Input costs are increasing WITH the price of oil, but they need higher oil prices to facilitate, um...the world.  It is an interesting quandary.  How soon before the oiligarchs all fake suicides?

Tue, 03/01/2011 - 10:44 | 1006824 Shameful
Shameful's picture

Why?  Some of them will probably suffer health problems, like Bernanke having a mysterious heart attack and closed casket funeral.  Wonder what he looks like with a hair piece and no beard?  But mostly I see them sitting astride their thrones, and why not.  The masses still are unaware of what is happening.  They are still looking at the political actors and thinking they are the ones in charge.  So the oligarchy can rotate a fresh crop of goons to take the heat for them when it gets to hot.  It's one hell of a steam valve system.  If the USSR had two faction one party system like the US we would still be in the cold war.

Tue, 03/01/2011 - 10:59 | 1006856 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

The majority of muslims in the region are fed up with the monarchy that is supported be Bernanke's Fed policy because food prices are too high, and the living standards that are below humanly possible.  The fight will go on as long as it has to.  And by the end, the oilgarchs being pansies, will run away.

Tue, 03/01/2011 - 11:02 | 1006878 Shameful
Shameful's picture

Pansies? Well maybe our definitions differ. These guys are stone cold killers. Now maybe they are not out with a lead pipe accosting people, but instead having their goons crack heads. And so long as goons are willing to crack heads they will stick around.

It's not like the House of Saud doesn't have some troops. Nominally allied with the US, so I'm not sure the US can say anything at all about them strafing people if needs be. After all who sold them all the gear? Can the US risk the House of Saud opening up a crypt full of economic/political skeletons? Or moving away from the petrodollar? If the US doesn't at least stay silent on the Saudi affair then I expect massive fireworks.

Tue, 03/01/2011 - 11:19 | 1006914 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

They are pathological, and once again you give them too much credit.   I think they are spoiled pansies who have never had a real opposition.  While the world used the dollar bling blind, these fuckers did what they wanted.  They were spoiled.  They have become complacent.  They will run away before they kill their own people.  If they start the US will be blamed. 

If this happens welcome to a WWIII that has no oil production.  The Nazis lost WWII due to a lack of oil production you know.  America has no infrastructure in place to support oil production, and if the US teams up with the house of Saud, the US will be seen as bad guys helping tyrants.  If they do not, they will not have the oil to facilitate their regime.  Lose/lose for the US/HSA.

Tue, 03/01/2011 - 11:26 | 1006976 Shameful
Shameful's picture

Of course the US will have massive problems.  I have never disputed this.  But are you assuming the oligarchy is tied to the hip with the US?  This does not seem to be the case to my eyes.  They are riding the US, and using it to their own ends.  When the US is used up they will discard it like a child would toss aside a broken toy.  Kinda like the UK and the British Empire.

Granted a lot of the lower end power brokers will get caught up in the disaster and lose a lot, but I have little reason to think the real power players don't see this coming.  After all if we can see it, then don't you think that with all their resources and think tanks the big boys see what is happening?  You may call them complacent, but old money is cautious about keeping itself going, and I would be hesitant to sell them short.

Tue, 03/01/2011 - 12:04 | 1007142 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Fair enough, but I think that what is happening in the Middle East and North Africa is being under rated by not only the media but by the oilgarchs themselves.  I think people have woken up.  I think that respective oilgarchical regimes (that means you too, US) are abouts to start falling.  I do not think the HSA will be able to justify killing their protesters.  Same with the US.  If the police state does try and lock us all down from America and across the world, I think simply the revolution will not be televised.

Tue, 03/01/2011 - 14:13 | 1007827 A Texan
A Texan's picture

I do not think the HSA will be able to justify killing their protesters.  Same with the US. 

 

If the US authorities start shooting protesters, expect that a lot of people will interpret that as a subtle request to turn in some precious metals - namely copper-plated lead, to the government for the good of the country, and to do so ASAP.  Most people who interpret it that way will send it in via airmail, cooperative souls that they are.

Tue, 03/01/2011 - 14:24 | 1007900 Ned Zeppelin
Ned Zeppelin's picture

Someone on MSNBC said of Khaddafy that he would be in power "until the money and the mercenaries run out."

Pretty much captured it.

Tue, 03/01/2011 - 11:37 | 1007037 BigJim
BigJim's picture

If it comes down to it - I think it will be 'gloves off' before the US allows the House of Saud to fall, unless they've got a new satrap lined up.

There'll be (another?) false flag here in the West, and we'll be told the protestors in Saudi are aligned with the terrorists who killed our children. Our brainwashed troops will 'restore order' as necessary. If the locals keep resisting, the death squads will be sent out. Eventually, they'll get the message... oil will go to $150 and the Saudi rulers will placate the survivors with more goodies.

Tue, 03/01/2011 - 14:16 | 1007857 A Texan
A Texan's picture

I agree with you whole-heartedly, except regarding the price of oil.  If things get so bad that we need to put troops into SA, then oil will be $200 in a heartbeat.  Then say hello to QE3 and goodbye to talk - even in the laughably pro-Obama media - of any recovery.  IOW, say hello to GD2.

Tue, 03/01/2011 - 14:25 | 1007906 Ned Zeppelin
Ned Zeppelin's picture

$150 or higher and it's game over.  It's a slow death at $100 and it will go quickly at $150. Forget $200. 

Tue, 03/01/2011 - 10:33 | 1006795 samsara
samsara's picture

Saudi Arabia confirmed today that it will not take advantage of the price of oil until it is at least $120 a barrel.

Upon which time it will empty it's tank farm and jaw bone about it's non-existent "Spare" capacity.

Tue, 03/01/2011 - 10:40 | 1006807 falak pema
falak pema's picture

That's a laugh! The higher the Brent price, the more money there is in the king's Bank for sale of Saudi crude at existing production levels. What do they mean "won't take advantage of"...? They have it on a plate!

Tue, 03/01/2011 - 10:32 | 1006796 johnnymustardseed
johnnymustardseed's picture

THE POPULAR uprisings across the Middle East are sparking similar unrest in the Kingdom of Saudi Arabia, with youth groups and workers in that country now calling for a “day of rage” demonstration in the capital, Riyadh, on March 11th.

  When these kings are faced with losing their thrones they will dump the dollar.

Tue, 03/01/2011 - 10:51 | 1006839 sethstorm
sethstorm's picture

Then the US can unceremoniously dump their bodies and install a new government.  Preferably one willing to act as a more friendly oil conduit.

Tue, 03/01/2011 - 10:45 | 1006820 sethstorm
sethstorm's picture

Perhaps the Sauds should be sent a message - try that, and the US waits until your country is rioting before we save you. 

Never mind the opportunity to cause Saudi Arabia to riot.

Tue, 03/01/2011 - 12:44 | 1007339 walküre
walküre's picture

What you fail to see is that the Sauds problems are the Sauds problems. We have our own problems and I see wide spread rioting and looting in the US before I see that happen in Saudi Arabia.

There is no money and the cost of everything is about to go ballistic. Try to mask that with a food stamp program.

Tue, 03/01/2011 - 10:45 | 1006823 Pants McPants
Pants McPants's picture

It's a good thing the US can just print more dollars to buy all that expensive oil.

Tue, 03/01/2011 - 10:46 | 1006825 Joe Sixpack
Joe Sixpack's picture

---

Tue, 03/01/2011 - 10:58 | 1006863 sharkbait
sharkbait's picture

sorry, the reference to the $134 billion in 'counterfeit'  treasury bonds blows the credibility of this.

Tue, 03/01/2011 - 11:04 | 1006882 Jim in MN
Jim in MN's picture

WHOLESALE gasoline approaching the $3.00 mark.  Fasten seat belts.

 

New blockbuster release in Saudi Arabia:

 

'The King's Speechless'

Tue, 03/01/2011 - 11:04 | 1006887 r101958
r101958's picture

Dollar printing is only exacerbating the problem. The finite (yes finite) resource called oil would/will continue to increase in price regardless of dollar printing. Printing only increases the rise in price. Now Bernank is saying that commodity price increases 'may' lead to some 'modest' inflation. Bwahahhahahaha. Folks, as Chris Martenson has stated.....we have a predicament....NOT a problem. There is a difference.

Tue, 03/01/2011 - 11:32 | 1007011 Jim in MN
Jim in MN's picture

Funny you should be so particular.  My favorite Edgar Allen Poe story has long been 'The Predicament' which, if you don't know, concerns a person who sticks their head out of a clock tower to enjoy the view, only to have the minute hand of the clock descend slowly but inexorably down upon their neck.

A perfect metaphor for our economy vis-a-vis certain, mmm, pressures being exerted upon it.

Here, the story is actually written by Poe in the absurdist style and is hilarious as well as brief:

http://classiclit.about.com/library/bl-etexts/eapoe/bl-eapoe-pred.htm

 

Tue, 03/01/2011 - 14:55 | 1008073 BigJim
BigJim's picture

            ...And Pompey, my negro!–sweet Pompey! how shall I ever forget thee?
            I had taken Pompey's arm. He was three feet in height (I like to be particular)
            and about seventy, or perhaps eighty, years of age. He had bow-legs and was corpulent...

They just don't write like that anymore.

Tue, 03/01/2011 - 12:41 | 1007326 alangreedspank
alangreedspank's picture

 

You're right. But I think those crazy ups and downs are mostly due to currency swings, free money and speculation associated with it.

 

Tue, 03/01/2011 - 11:31 | 1007007 CrashisOptimistic
CrashisOptimistic's picture

The aggressive military talk about Libya is going a long distance towards making it clear that the Saudis can't replace Libyan shut in production, whether it be for reasons of oil quality or quantity.

It's just a lousy 1 mbpd that Libya has shut in.  That's nothing.  When it gets worse, this sucker is going over a cliff.

Tue, 03/01/2011 - 11:49 | 1007083 walküre
walküre's picture

But President Obama explained yesterday in great detail how the American economy is going to grow magically over the next 10 or so years, no more pain, no more unemployment.

Clearly the Prez had factored this already in. I'm not worried. /sarc

Tue, 03/01/2011 - 12:35 | 1007291 AldoHux_IV
AldoHux_IV's picture

The Saudis are another prime example of how imbalances will create problems-- same shit different smell there, here, and across the world.  All thanks to centrally planned economic bullshit and terrorism by the IMF, WorldBank, central banks (the capo's), and manipulated by the MSM/LSM and dirty politicians willing to sell their souls for a cheap dollar or two.

Tue, 03/01/2011 - 12:35 | 1007292 alangreedspank
alangreedspank's picture

 

Whether the Saudis do have the oil or not, I doubt they really are doing their best to bring the prices down; after all it's been 147$ before and all the Arab states went happily on crazy spending binges.

 

Tue, 03/01/2011 - 14:58 | 1008081 Citxmech
Citxmech's picture

Yeah - It went to $147/bbl and the entire world economy promptly went over the cliff along with demand.  The Saudis are not stupid, they want the maximum stable income from their oil resource - that is not found by jacking up the price until you have surpluses that no one can afford.  There is a sweet spot in terms of price/bbl and we are far North of it right now.

Tue, 03/01/2011 - 14:10 | 1007815 CEOoftheSOFA
CEOoftheSOFA's picture

I think Matt Simmons and Jim Rogers are correct:  Saudi Arabia has little, if any, spare production capacity.  The Aramco web site has no new oil exploration or development projects in the 5 years since "Sunset In the Desert" was written.

Tue, 03/01/2011 - 14:52 | 1008052 steve from virginia
steve from virginia's picture

KSA lacks the means to control prices which control themselves.

At a high enough price the economy works worse than it (hardly) works currently.

The idea that KSA has any control over prices is a myth.

A parallel myth is 'spare capacity'. OPEC members have been pumping as much as possible including Saudia.

This spike has to go to its logical (crashy) end. Then prices will come down!

:)

Everyone will be flat broke w/ bill collectors stalking the landscape like vampires.

Hope you aren't a debtor!

:)

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