Oil Producers to Meet to Discuss Supply, Prices

Government leaders and oil producers will meet in Saudi Arabia over the weekend to discuss record crude prices. Saudi Arabia, the world’s biggest oil producer, is considering raising production. But will this solve the problem?

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Exploding commodity prices, lax monetary policy, and sovereign wealth funds   
Guillermo Calvo
20 June 2008

Leaders, Oil Producers to Meet to Discuss Supply, Prices: Video
Rebecca McLaughlin-Duane
Bloomberg, June 19, 2008 23:12 EDT

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What's been said:

Discussions found on the web:
  1. Douglas Watts commented on Jun 20

    I fail to see how oil producers would perceive oil at $135 a barrel to be a problem.

    But that’s just me.

  2. cinefoz commented on Jun 20

    BR wondered:

    But will this solve the problem?

    reply: No, not even close. It’s not a supply problem. It’s a regulatory problem. China’s decision to raise internal prices for oil products will not matter. Demand for the use of oil is not a pricing issue. Peak oil is probably true, it just has nothing to do with oil pricing. When will the average person wake up. Even Joe Lieberman gets it. I wonder if he and Congress will see it through and close the loopholes that oil liars and thieves take advantage of daily?

    The Bush Administration will go down in history as the worst administration ever, and oil will only be one reason for this notoriety. Although maybe it will be the main symbol of how it wants to screw everybody except a chosen few when all the facts eventually come out.

  3. cinefoz commented on Jun 20

    Oi pricing today as performed by the oil liars: You can fool all of the people some of the time.

  4. William Laird commented on Jun 20

    Yes – prices will go down for 3 to 6 months – just enough to prop up the economy for the election.

    Saudi + Kuwait + China + Iraq on the supply side. U.S. policy changes regarding investment on the speculation side.

    Of course, it will be just a temporary blip as the dollar continues to crash and China
    soaks up any excess supply.

    Smart money is starting to setup the other side of the oil trade.

  5. Ken H. commented on Jun 20

    There is not a shortage of oil! Unlike housing, The oil producing countries have been smart to NOT increase production. Does Iran still have tankers just sitting full of oil?

    After Katrina, we had a shortage, remember? No gas! Do we have that problem now? No!

    This is a shadow op tax to the world to bail out this global financial melt down.

  6. Mike in NOLA commented on Jun 20

    Don’t think it’s all liars or even big liars, but it is a bubble which from big money is benefiting. Like any bubble, it will end when something (maybe supply, maybe demand) makes enough people decide to get out. Price drops some, leverage increases that and it becomes a stampede. But the peak is hard to predict. I thought John Hussman’s description makes the most sense mathematicslly:

    “I’ve noted before that once a speculative price run-up becomes nearly vertical, it becomes very difficult to form expectations about the final price peak, since very small changes in the date of that peak imply significant differences in the final price.”

    Whole article, including analogies to past bubbles, here:

    A Clue from Contango

  7. larster commented on Jun 20

    OPEC producers make a great deal of money at $100 a barrel. Anything above that brings on the spectre of conservation, changing habits, and alternatives. If OPEC could bring on more supply, it stands to reason that they already would have, since they benefit from doing so. Therefore, my feeling is that they cannot bring more supply on and are reduced to jawboning. As this plays out, we will see oil continue to rise, unless someone can prove that their is more OPEC production moving to market. Without proof we will have documentation that they cannot bring on new supply.

  8. Sam Jacob commented on Jun 20

    India’s new inflation number is 11.05%
    Oil is causing a worldwide issue. like you said, barry, high prices will eventually bring this baby down, but from which price? i think some where between $150 and $200

  9. me commented on Jun 20

    Probably not. Venezuela and Iran are not on board. Nigeria or part of it is shut down.

    The question is, what type of crude will the Saudis supply? If it is the heavy crap that no one wants it will do nothing. Refineries are paying a 5 or 6 dollar p[premium for light sweet crude because they cannot refine the heavy stuff.

  10. ECONOMISTA NON GRATA commented on Jun 20


    “………Saudi Arabia, the world’s biggest oil producer, is considering raising production. But will this solve the problem?…..”

    From “Emirates Business 24/7″….

    “…………..”The council will listen to a report by deputy chairman of the Shura water and public utilities committee, Salim bin Rashid Al Marri, who will argue for cutting crude supplies to maintain the Kingdom’s underground reserves….”

    “Marri will seek to persuade council members that the oil production must be linked to the country’s actual development needs not the needs of foreign consumers,” Alriyadh newspaper said in a report from the capital Riyadh………”

    My Comment:
    In my opinion this will be self-perpetuating and in effect cause prices of crude oil to move exponentially higher. Higher prices paid for crude oil, diminish the need for increased output. Thus, as prices rise, output declines, the opposite of conventional economic wisdom.

    In other words, we can expect producers to act in their own self interests. Anything else is an illusion…


    Best regards,


  11. Andrew commented on Jun 20

    Barry writes:

    Government leaders and oil producers will meet in Saudi Arabia over the weekend to discuss record crude prices. Saudi Arabia, the world’s biggest oil producer, is considering raising production. But will this solve the problem?

    Atrios would answer: No.

    This has been simple answers to simple questions.

  12. Short Man commented on Jun 20

    I think one point that has been missed in the increased financial acumen of the oil producing countries. I know several very bright commodities people (traders/analysts) here who were earning decent salaries here(say $150k-$300k) who have gone over to Dubai and Abu Dhabi because of packages they couldn’t pass up (triple the pay, one third the taxes, free housing/car).

    Give a cartel system more tools/power/information to manipulate the price then the closer they will come towards achieving optimal profit maximization. No one should expect fair market prices based purely on supply and demand in a well operated cartel.

  13. jz commented on Jun 20

    I don’t even think people know what peak oil is. It refers to the dynamics of production of a given field. It is not a reliable estimate of how much oil there is left in the world.

    The guru of this movement for this decade was Matt Simmons. His whole case was that Saudi Arabia is running out of oil. Everyone assumes because oil prices went up he was right. But was he?

    Saudi Arabia has production capacity of over 11 mbpd right now and is producing 9.7 mbpd, and this is what Simmons said back in 2005, “Yeah, the chance of that is less than one percent. Now when you get less than one percent it doesn’t matter what it is. I also think the risk of actually producing at 10-12mbd has a chance of maybe five percent. The safest production profile for Saudi Arabia over the next decade is to lower their current production by a third to 50%.”

    Simmons was dead wrong.

    Then we had the great demand from China and India. They kept consuming regardless of price until we learned later that the price increases we were seeing they weren’t.

    And the last oil nut argument is that oil is getting harder to find. Never mind production has increased from 79 mbpd in 2003 to 86.6 mbpd today. The most expensive oil to produce is $50 a barrel. How that justifies $140 crude is beyond me.

    But the really big news in the oil world is not in the main stream media. The big news is Iraq. From a production low of 1.1 mbpd at one point in 2006, they have hit a new post war high of 2.6 mbpd.

    “While its proven oil reserves of 112 billion barrels ranks Iraq second in the world behind Saudi Arabia, EIA estimates that up to 90-percent of the county remains unexplored due to years of wars and sanctions. Unexplored regions of Iraq could yield an additional 100 billion barrels. Iraq’s oil production costs are among the lowest in the world. However, only about 2,000 wells have been drilled in Iraq, compared to about 1 million wells in Texas alone.”

    Iraq’s new PM has done an unheralded job of stabilizing the country. Here is a link to bids on new fields: http://www.iraqupdates.com/p_articles.php/article/32264

    Iraq hopes to increase production to 4.5 mbpd in five years and to 6.5 mbpd in ten years, and they have the reserves to do it.

    Outside of the temporary blip in 2006, Iraqi oil production from 2004 to 2007 has been stable at around 2 mbpd according to EIA data.

    And what do the oil nuts say about Iraqi oil as the source of future production? “If yer gonna rely on Iraq, yer crazy.”

    To which, I respond we already are. If Iraqi crude was cut off, we would see $200 easily.

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