More predictable Russia will make Arabs step into the background
Oil prices controversy was on its highest point shortly before the opening of the OPEC annual conference in Osaka. Yesterday’s statement from the American Secretary of Energy, Spencer Abraham added more fuel to the fire.
Libya and Saudi Arabia set out their protest against the oil production increase. It should be mentioned here that Saudi Arabia took the opposite position before. Now we have to see, what Algeria has to say on the subject. Russia can spoil the game of exporting countries, as always. The USA is definitely going to help Russia in that.
Bloomberg reported that nine of OPEC countries were not going to increase oil production quotas. Now we have Libya and Saudi Arabia on that list too. A Libya spokesperson believes that the world oil market is sufficient without it. Indonesia, Kuwait, Venezuela, Iran, Qatar, United Arab Emirates and Nigeria have already stated that they would vote for the preservation of current quotas. Since OPEC makes its decisions on a unanimous basis, it all now depends on Algeria’s position.
The latest statement from Iraqi dictator Saddam Hussein has made the situation even worse for the USA. Hussein agreed for the return of UN inspectors to the country and refused from additional collection from the customers of the Iraqi oil. Oil prices dropped down to $26.92 per barrel after that announcement. Experts believe that Saddam Hussein hopes to use the American oil lobby in order to stop the preparations to the army operation in Iraq. The countries of the European Union are against the American military interference, together with the Arab world and Russia. Yet, the final demarche of OPEC countries might ruin the work that has been already done.
With their unwillingness to increase oil production quotas, OPEC countries are actually starting the open confrontation with major oil consumers. Virtually, they are trying to show pressure on them. However, the USA and the EU have clearly expressed their requirements to OPEC. This situation makes the USA’s attack on Iraq more than just probable. Furthermore, it is about time Russia should get into the picture.
The president of the Cambridge association for energy research Stanislav Joseph stated at the Baikal Economic forum that Russia was likely to increase its oil output by six million barrels a day. He added that both the USA and Asia were in need of Russian oil and gas. The biggest problem is to make those resources economic. Indeed, the transportation of oil from Saudi Arabia is 1.5 times as cheap than the one from Siberia. The Cambridge expert added that there were several variants to reduce those costs. He reminded that the USA was currently the largest energy consumer in the world. America is really interested in the import of oil from Russia. The reason why is very simple: Russia is more predictable now than the Arab countries.
Therefore, there is one conclusion that can be made now. The Russian Fuel and Energy Complex is likely to obtain serious Western investments for the development of the petroleum infrastructure and for the further increase of oil output. OPEC’s oil monopoly might be completely ruined with the help of American aircraft carriers and Russian oil producers. That is why OPEC can keep on saying no as much as it wishes and stick to its invariable quotas.
Dmitry Slobodanuk PRAVDA.Ru
Translated by Dmitry Sudakov