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| Arabia |
| Deflated by Oil Price's Dive |
| 2008-10-25 |
| The world's petro-powers -- the oil-exporting nations armed with vast, high-priced crude reserves -- are looking a little less imposing now that prices are tumbling. Instead of flexing their financial muscle abroad, cash-rich oil exporters have been forced to bolster institutions at home, spending billions of dollars to prop up banks, currencies, stock markets and other aspects of their economies. Around the world, oil price shock has given way to aftershock. Yesterday, crude oil prices briefly touched a 16-month low before closing at $67.84 a barrel, up $1.09 but less than half their July peak as traders worried that a global economic slowdown will shrink demand for petroleum products. For oil exporters, the price decline has compounded the global financial crisis. Kazakhstan has raided its once sacrosanct national oil fund to bolster banks that borrowed from abroad; Iran, which drained much of its rainy day fund to pump up its economy even before oil prices fell, is now having trouble financing oil and gas development projects; Venezuela might run a deficit to pay for massive social spending; Mexico has spent billions of dollars defending the peso; and Russia, Saudi Arabia and the United Arab Emirates have dipped into their cash hoards to rescue domestic financial institutions. The sudden change in fortune will dominate the agenda at today's emergency meeting of the Organization of the Petroleum Exporting Countries; the 13-member cartel that is expected to slash output by 1 million to 2 million barrels a day to stop the slide in oil prices. "The meeting this week shows they're concerned and they need to micromanage [output] some more," said Fareed Mohamedi, head of country strategies at PFC Energy, a Washington consulting firm. To members of OPEC, this moment recalls the Asian financial crisis in 1997, when the oil cartel increased production to ease international economic pressures only to see oil prices collapse. Now, in a new economic crisis, OPEC members will only be debating how big a cutback is needed. There is, however, no need to pass the tin cup for oil exporting countries, analysts note. The six members of the Gulf Cooperation Council have $2 trillion of financial reserves. Russia's and Kazakhstan's financial reserves are big enough, for now, to stave off the kind of crisis that shook both nations in 1998. Even populous and impoverished Nigeria has paid off foreign debts and built up reserves. Moreover, the average oil price has still been higher than in the previous year, according to OPEC. Kuwait's finance ministry said last week that it had collected $54 billion in revenue in the first half of the year, more than it had anticipated for the entire year. The spike in prices has also happened so quickly that oil exporting nations haven't had time to raise the price assumptions used for spending plans. The Saudi 2008 budget assumes prices between $40 and $45 a barrel. "Many of these countries were much more prudent than they were in past," said Robin West, chairman of PFC Energy. As a result, he said, most oil exporters "are still in pretty good cash positions for now." $40 a barrel = $1 a gallon product, $1.50 a gallon for gas. |
| Posted by:Fred |
| #10 Iran may blow it up itself, accuse Israel, and then lead a war against Israel through Syria. And Israel, now that Olmart is no longer, could cut Syrian army to pieces. Anyway with oil at 150$ Iran was untouchable. But at under 65... |
| Posted by: JFM 2008-10-25 18:15 |
| #9 "countries that so despise us are so tied economically to us" It's almost like one follows the other. |
| Posted by: Minister of funny walks 2008-10-25 16:52 |
| #8 I find it amusing to see the countries that so despise us are so tied economically to us. Watching the countries fail one at a time will be entertaining. |
| Posted by: 49 Pan 2008-10-25 13:22 |
| #7 It's not just the Iranians - "SANTA FE, N.M. - New Mexico Gov. Bill Richardson is ordering cutbacks in state spending to help offset a projected budget shortfall of more than $200 million this year. Richardson announced a plan Friday to trim spending, including a freeze on hiring. State revenues this year are expected to be about $344 million lower than previously projected because of the slumping economy and lower prices for oil and natural gas, Richardson said. That means revenues will fall at least $200 million to $250 million short of covering spending in the current budget year, which started in July and runs through June 2009." Like the Donk he is, Bill didn't salt away the bounty when it was flowing. Doesn't take an elite bureaucrat, politicians, or economist to understand that its a variable item that should be handled after its been collected rather than betting on the future. |
| Posted by: Procopius2k 2008-10-25 11:58 |
| #6 Hopefully the IDF has improved its counterbattery techniques. |
| Posted by: badanov 2008-10-25 10:31 |
| #5 Meaning, for the first time in 30 years, IDF won't have to fight with both hands tied behind its back and one foot in a block of cement. Wingnuts at home blame all of our problems on foreign forces, most usually the USA/the joooos, up to a point where there's some kind of a consensus at the main french wingnut blog that we need the USA to fall, to get our freedom of action back, or even to be militarily invaded by putin and russia to get rid of the USA/jooos/Big business-engineered mass-immigration from the third world. Becasue, you know, our woes can't possibly be our fault, stuff we did or didn't do, our leadership being what we deserved, or anything like that. It's foreign forces, outside our control, there's nothing wrong with us ultimately, once the bad outside influences are removed, our people will stop being sheepish and blind, and will rise up. Of course. |
| Posted by: anonymous5089 2008-10-25 10:17 |
| #4 Yea, but see Glenmore with a financial crisis at home, the World will have a lot less attention to spare for the iniquities of |
| Posted by: g(r)omgoru 2008-10-25 10:11 |
| #3 Iran, which drained much of its rainy day fund to pump up its economy even before oil prices fell This is a potentially dangerous situation. The typical response for a government, especially a quasi-totalitarian government, to internal crisis is to find an external scapegoat. In the case of Iran, that could be Israel. Israel may not have to bomb Iran's nuke plant - Iran may blow it up itself, accuse Israel, and then lead a war against Israel through Syria. It's Sunni neighbors would be handcuffed, oil prices would jump, and all internal hardship would be due to the Little Satan. How much could we do, given our exposed position, our thinly-streched force, and especially our lack of national and political will? |
| Posted by: Glenmore 2008-10-25 10:05 |
| #2 TLH is 2.66 the gallon. I laff. Fill those damn things up. It's good for 'ye! still can't see good enuf |
| Posted by: .5MT 2008-10-25 10:01 |
| #1 gas is under $3/gallon for regular here |
| Posted by: Frank G 2008-10-25 09:56 |