Posted by Lexington Green on September 25th, 2003 (All posts by Lexington Green)
This article is one of many which were out today. One theme was that it seemed odd that OPEC would cut production now, with quotes like this: “I am surprised that OPEC would reduce their output at a time when stocks are still substantially below historical norms and we are entering the high demand winter season in the northern hemisphere”, and this: “It surprises me that they were prepared to cut at these prices,” said Nigel Saperia of Swiss trading house Glencore. “I wouldn’t want to play poker with these guys.” Interesting. If a decision does not seem to make economic sense, you have to ask: does it make political sense?
Absolutely, yes. If I were the Saudis and the Iranians and Hugo Chavez and others in OPEC, I think it would be worth it to suffer some economic loss in the short term if I could bring on a recession which would finish off Bush’s chances of reelection. The Saudis in particular know that they are in the cross-hairs. Get rid of Bush, and you have a new lease on life.
OK. Yeah. This is pure speculation on my part, but it makes sense.