Courtesy of Bruce Krasting
On June 23 I wrote about the Obama/IEA decision to intervene in the global crude market. I hated the plan. One of the points I made against it was this:
Is (the IEA intervention) about teaching a lesson to OPEC? I am concerned that this is a factor. The US wanted OPEC to up production. That didn’t happen. So the bad boys who produce oil just got a shot across the bow.
Watch if this angle on the story gets “play”. It would piss off those bad boys and they will retaliate. Does O really think he can take on the world oil market?
-OPEC will respond. “We” will pay a price for this.
Bloomberg has a story out just now that Saudi Arabia is not so happy about this and some cut backs in production just might be in order. From the article:
Oil rose in New York, extending the biggest gain in six weeks, amid concern OPEC may reduce output in response to the International Energy Agency’s move to release oil stockpiles.
“If IEA countries are releasing stockpiles Saudi Arabia won’t increase production as much as expected,” said Hannes Loacker, an analyst at Raiffeisen Zentralbank Oesterreich in Vienna.
“There are concerns Saudi Arabia will cut production” in response to the IEA move, said Roland Stenzel, an oil trader at E&T Energie Handelsgesellschaft mbH, said from Vienna.
Oil is on a tear as a result of this (and other factors). If the end result is that OPEC cuts off production by a percent or two the ultimate cost to global consumers will be measured in the hundreds of billions.
I also said this last week. I’m now certain that I was right:
-Obama will get some egg on his face with this one.
