» Bush begs Saudis (again) Middle East Strategy at Harvard
From Gal Luft
months and thirty extra dollars a barrel later, President Bush is again
in Saudi Arabia trying to persuade the Saudis to open the spigot and
increase OPEC production. Last time the answer was a resounding no.
Not even a gift of 900 precision-guided bombs helped convince the
Saudis to show more oomph at the pump. The lesson for the
Administration: speak softer and wave a bigger gift. This time the
United States has agreed to help Saudi Arabia, the world’s
largest oil exporter, develop “civilian” nuclear power.
Of course the Saudi interest in nuclear power has nothing to do with
energy production but with Iran and the Sunnis’ fears of Iranian
hegemony. Does President Bush really believe that helping the Saudis
with nuclear technologies would cause Tehran to pull the plug on its
Saudi Oil Minister Ali al-Naimi insists that the oil market is well
supplied, blaming the high prices on hedge funds and speculators.
Considering the fact that OPEC production level is not much higher than
its level thirty years ago and that Saudi output is lower than it was
two years ago, putting the entire blame on speculators is utter
The Saudis have always taken pride in their role as swing producers,
claiming to own over 2mbd in spare capacity. But what good is this
liquidity mechanism if they are not prepared to use it? When last month
Nigeria’s production fell by 330,000 bpd, OPEC did not lift a
finger to compensate for the loss. At what level will they provide us
with liquidity? $200? $300?