Saudi Troubles May Be Keeping Oil Prices High
By Jefferson Morley
washingtonpost.com Staff Writer
Thursday, June 3, 2004; 10:00 AM
As the ministers of the Organization of the Petroleum Exporting Countries (OPEC) gather in Lebanon today, the question in the international online media is whether Saudi Arabia, the oil superpower that suffered another terrorist attack last weekend, can overcome fears that have driven oil prices to a 21-year high.
OPEC's goal, reports Aljazeera.net, Web site of the Arab cable news channel, is to increase production in an effort to drive down prices.
But some commentators doubt the Saudi government's long-term ability to dominate the world oil market, suggesting that high prices may stay high.
The editor of Al-Quds Al-Arabi (in Arabic), a leading London-based newspaper of the Arab world, said Monday that al Qaeda is winning its battle against the Saudi government. Abd Bari Atwan wrote that recent attacks "furnished further proof that the organization is penetrating all the barriers and stringent security measures and can reach its targets easily and quickly."
In the Saudi press, front-page reassurances clash with worrisome reports.
On Wednesday, the Arab News quoted a "financial consultant" as saying the country's oil industry "is strong enough to withstand the shocks inflicted by a string of terror attacks that began in May 2003 and increasingly target the oil business."
But the same day the Saudi Gazette reported that the oil production cities of Damman, Khobar and Dhahran in eastern Saudi Arabia remain on "high alert" as security forces search for three terrorists who escaped from the scene of the attack that killed 22 people last Sunday.
The Financial Times noted that "if a collapse of the Saudi regime removed the country's supply from world markets, even temporarily, 10 per cent of global output would vanish."
The impact on oil prices and the world economy would be "far greater" than the last great oil shock in 1979 when the loss of Iranian oil raised the price of a barrel of oil to $100 in today's prices.
The long-term threat, said the London daily, is the ongoing conflict between the closed, conservative Saudi state and the American superpower that is seeking to remake the Middle East.
"After September 11 2001, the US entered an ideological conflict with the world's oil superpower, which is itself politically riven," the FT concluded. "This should make us all very nervous."
Even in the short term, OPEC may not be able influence the price of oil, says the Guardian.
Member countries are already pumping more than two million barrels a day in excess of official production quotas, says the London paper. "Traders say Saudi Arabia's proposed increase in quotas will only add 500,000 barrels to existing production. Only Saudi Arabia, the United Arab Emirates and Kuwait have spare capacity and they would really have to pump a lot of oil to make a difference."
[Wire reports today indicate the cartel will boost output 8 percent, according to the Qatari Oil Minister Abdullah Attiyah.]
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