DiscussWorldIssues - Socio-Economic Religion and Political Uncensored Debate - View Single Post - Saudis cut oil output by 1 million barrels a day to raise prices

**beethyday** · 01-02-2007, 01:34 PM

The only portion of the global oil supply Saudi Arabia controls is the portion that they supply. As they'll find out again (like they found out in the 1980's) is that the worlds oil needs can be met w/o Saudi oil: at one point in 1986, SA was pumping less than 100,000 barrels/day. Some lessons just have to be repeated, it seems like.

When you control less than 10% of the market, any attempt to manipulate the supply-demand function by reducing your own production is an ultimately self-defeating exercise because other countries will be perfectly happy to cover your loss. And once they get those facilities up and running and you, SA, now have a new class of belligerents at the negotiating table, you realize that your attempts to control supply merely funded a new generation of competitors at your expense.

01-02-2007, 01:34 PM	#3
beethyday Join Date Oct 2005 Posts 497 Senior Member	The only portion of the global oil supply Saudi Arabia controls is the portion that they supply. As they'll find out again (like they found out in the 1980's) is that the worlds oil needs can be met w/o Saudi oil: at one point in 1986, SA was pumping less than 100,000 barrels/day. Some lessons just have to be repeated, it seems like. When you control less than 10% of the market, any attempt to manipulate the supply-demand function by reducing your own production is an ultimately self-defeating exercise because other countries will be perfectly happy to cover your loss. And once they get those facilities up and running and you, SA, now have a new class of belligerents at the negotiating table, you realize that your attempts to control supply merely funded a new generation of competitors at your expense.
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