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.