A real market clash within OPEC
Tuesday, September 23, 2008 at 4:25PM WORLD NEWS: "Oil-Production Move Is a Tug of War: Venezuela, Iran Seek Cuts to Prop Prices; Gulf Would Hold Off," by Neil King, Jr., and Spencer Swartz, Wall Street Journal, 8 September 2008, p. A8.
It's the usual struggle, and not one that ever goes away. The Saudis and GCC are more mindful of not killing their golden goose—Western and now Eastern advanced economies' performance, while those who prefer to consume their seed corn immediately (the populists in Venezuela and Iran) want their money up front.
The natural market forces are still in effect: too-high prices force a slowdown of usage and overall economic activity. The question now is the near-term landing point. The Saudis want mid-to-upper 80s. That's been my sense all along: the new ceiling will be not that much under $100 per barrel, given the rise in global demand. But there was little market rationale for almost $150, so the speculation has simmered down some.
Still, no chance of ever going back to the past of truly low prices, and better that we don't. We simply need to continue moving on past oil, and high prices are a good driver.
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