MidnightWatcher – Prophecy in Motion

The Sunni push comes to shove …

By Guy Chazan, FT – “Saudi Arabia is on course for a showdown with fellow Opec members at this week’s meeting of the global oil cartel, after it called for a higher output target despite the recent drop in crude prices.

‘Our analysis suggests that we will need a higher ceiling than currently exists,’ Ali Naimi, Saudi Arabia’s oil minister, said in an interview with the Gulf Oil Review.

Oil prices have fallen sharply over recent months, from a four-year high of $128 a barrel in March to about $100 amid concern about the eurozone debt crisis and the slowdown in the global economy.

Fellow Opec member Iran has blamed Saudi Arabia, Kuwait and the United Arab Emirates for the price drop, accusing them of producing too much oil.

Opec, which supplies 40 per cent of the world’s crude, normally responds to a sharp drop in prices by curbing production. However, Saudi Arabia’s current policy objective now is to prevent crude rising much higher than $100 a barrel…” Read more.

Saudi-Iran Rivalry Looms Over OPEC – “Iran and other states are expected to press Saudi Arabia to scale back its record output when OPEC meets next week in Vienna, or face the risk of a new oil-price collapse. Much has changed since the group last met in December and managed to put aside its differences to agree to collectively produce 30 million barrels a day. For one thing, oil prices in London have fallen below $100 a barrel as the world economic outlook has worsened. For another, world powers have raised the pressure on Iran’s nuclear program while urging Saudi Arabia to pump more oil to make up for any Iranian shortfall. The combination of these factors has sown discord in OPEC, with several members fretting over the current output level. Yet despite the rhetoric, few analysts expect OPEC to make dramatic shifts next week. OPEC is currently pumping nearly 6% above its production ceiling, according to most estimates. Nearly all of the excess comes from Saudi Arabia…” Read more.

Flashback: Report: Well-Connected Saudi Businessman Says Saudi Arabia Is Planning To Bankrupt Iraq And Iran – “Barton Biggs, the storied hedge fund manager who runs Traxis Partners, recently had an interesting encounter recently over lunch with a Saudi businessman who explained to him the real motivations behind Saudi Arabia’s ramp up in oil production and why oil prices will likely continue to fall as a result for an extended period of time. It’s all part of a plan hatched by the Saudi royal family… ‘Our two most dangerous enemies are Iraq and Iran. Both are Shia, and both are trying to destabilize the Arab world and our Sunni kingdom by funding terrorism. Our only weapons against them are our wealth and our oil. Their current vulnerability is their financial fragility. Their financial reserves are a fraction of ours, and they desperately need money to prop up their economies… we will gradually increase our production with the objective of breaking the price of crude down to sixty dollars a barrel.” Read more.