Posted on 12/04/2008 7:24:09 AM PST by thackney
Saudi Arabian Oil Co.'s surprise increase in official selling prices to Asia, a key market for the state-owned energy giant, may signal that the country is preparing for further reductions in oil supply.
Fellow Middle East producers in the Organization of Petroleum Exporting Countries have lowered OSPs in response to continued weakness in demand, and they have largely failed to adhere to the cartel's recent pledges to cut output.
So the job of shoring up oil prices may be falling squarely on the shoulders of the kingdom, the largest and most influential producer, industry analysts and participants say.
Late Wednesday, Saudi Arabian Oil Co. hiked its OSPs for next month's crude supply to Asia while lowering most prices for the U.S. and Europe.
The company, also known as Saudi Aramco, marked up its Arabian Extra Light oil even though regional producers such as the United Arab Emirates and Qatar cut their prices earlier in the week for similar grades of high-sulfur or "sour" cargoes.
The OSP for flagship Arabian Light was raised for the first time in three months, according to a company notice - despite waning, not strengthening, demand for crude.
"We are totally shocked. The adjustments are quite (unexpected)," said an official at a Southeast Asian refinery that processes mostly Middle East sour crude.
"They've only adjusted for Asia, not Europe or the U.S. Is (demand in) Asia really so much better? We didn't see improvement in product cracks."
Saudi Aramco, which doesn't publicly comment on pricing policy, is widely known to demonstrate an accurate reading of market trends - including customer demand - and the surprise price hikes are fanning speculation that it may be laying the groundwork for a corresponding adjustment in supply.
Oil producers are reluctant to further give up market share...
(Excerpt) Read more at rigzone.com ...
They ALL need the cash flow, and they ALL lie about their production levels.
Let them eat oil!!
But LLoyds publish the export volumes keeping them relatively honest.
Perhaps it's that way most everywhere, but I know firsthand it's rampant in oil.
Ah, good plan. As demand drops, increase the price. Brilliant. No wonder the Arab space program and nanotech efforts are so successful. These guys are *smart*.
OPEC basket price under $41.
It’s still high, too.
Their purpose of existence is to manipulate the supply to effect the price. The way to reduce supply is to raise the price.
Too bad we can't just tie the cost of them buying all the stuff they need to keep their sand pits operating to the cost of a barrel of oil. They love our products and they really love buying them with dollars that we happily provide to them. They are reaching the point now where there's not enough dollars coming in to fund their extravagant way of life AND support terrorists intent upon killing us!
Sometimes life is just sooooooo good!
Vice versa.
OPEC is a classic cartel, and cartel members ALWAYS cheat on their assigned quotas. The rewards for honesty apply only to the entire membership as a group, and the rewards for cheating accrue ONLY to the cheater - and are far greater than any possible penalty.
We need to form a food cartel.
That gas hit 4 and 5 was the straw that broke the US then worlds economic camels back.
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