The Saudi move followed a weekend of talks between the UN secretary general, Ban Ki-moon; the Saudi ruler, King Abdullah, and the country’s oil minister Ali al-Naimi.
The news is expected to help depress the crude oil price, which hit a record high of $139 a barrel last week, ahead of an unprecedented meeting of oil producers and importers to be held in the Red Sea port of Jeddah on Sunday." Guardian
Sooo, the Saudi king is going to increase production at the margin on crude oil going into the spot market and this is expected to lower the market price on deliveries of crude to refiners. That, in turn, is expected to cause a failure in confidence in the whole nasty complex of capitalist hedge fund managers, index fund managers, bankers, advisers to same, and individual mega-investors. It is hoped/believed that this failure in confidence will cause the players to lose faith in their ability to pass the risk along to the greater fools waiting somewhere in speculator limbo. After that set of developments the price per barrel is supposed to fall, a lot. I believe this to be true. We will assemble here afterwords to gloat, or not.
A couple of things…
– This declaration by the Saudis means that the Saudi gremlins (something like the gnomes of Zurich but more colorful and with bigger boats at Nice) believe that they can affect the price by doing this. It is intuitively obvious that they thought that all through the time that they assured the cretins in the Bush Administration that they could not possibly increase oil production since they were already at the top of their production limit. I seem to remember that some of you believed that.
– Believing that, they still did not choose to increase production enough to take the steam out of the commodity/financial market upward spiral in price. That spiral gained speed as marginal scarcity fed the greed and confidence of the players.
– Now they are going to boost production because the accelerating rate of destruction of the world economy threatens everyone, including them. Even 300 foot yachts can be threatened by instability.
– Why did they play this game? The Saudis are angry with us and have been for some time. They are tired of being treated like poor relatives at the family reunion. They are tired of being ignored in the matter of policy with regard to Shia triumphalism, Iran and the Palestinian question. The Saudis don’t care about that last one? Only a neocon or a State Department hack toadying his way towards promotion would even try to believe it to be true that the Saudis do not care about Palestine or Jerusalem. Ask the Saudis.
Foreign policy doesn’t matter to the "little people?" Ask yourself if that is true next time you fill up mama’s Explorer. pl