Prices and production
After briefly touching $75 a barrel on Tuesday oil slid back to close at $71.43 on Wednesday. With the Department of Energy reporting a small increase in crude stocks and MasterCard reporting a decrease in gasoline consumption last week, further price increases will likely need more solid indications of an economic recovery in the US or China.
In Nigeria, the militants have once again suspended the peace talks and threatened to resume attacks on September 15th.
The 20 trillion barrel oil discovery that was reported by the Iranian news agency is now reported as a more modest 8.8 billion barrels and the largest discovery made in the last five years. The Iranians are now saying that their reserves have grown from 90 to 138 billion barrels in the last three years thanks to new discoveries. Foreign analysts note that Iran currently does not have the resources or the technology to effectively exploit new finds. With tougher western sanctions in the offing, Tehran will need considerable Russian or Chinese assistance to increase or even maintain current production.
The Saudis aroused
The nearly continuous talk in America about the need for energy independence from foreign, particularly Arab oil, is clearly making Riyadh nervous. With Washington spending billions on conservation, renewable energy, green jobs, new technologies, and seriously debating emissions reduction for the first time, the Saudis see a potential disaster in the making.
With global oil consumption already down by several million barrels per day, Riyadh fears a future in which the demand for crude, their only product, may slowly melt away.
This week Prince Turki Al-Faisal, former Saudi Ambassador to the US, took an intemperate swipe at the Obama administration, calling the talk of energy independence “political posturing” and “demagoguery.” The prince said that there is no way in the foreseeable future that the US can free itself of foreign oil and that the US should focus on a policy of “energy interdependence” that takes into account the needs of the oil producing as well as the oil consuming countries.
