Word: opec
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...instability in the world’s fourth-largest oil producer might be expected to decrease the flow of oil and cause prices to rise. Indeed, politically motivated strikes have hurt oil production in Venezuela, South America’s only member of the Organization of Petroleum Exporting Countries (OPEC) in the past few months. One of the major factors in Chávez’s two-day fall from power was the work stoppages and strikes plaguing the state-run oil company, Petroleos de Venezuela...
...prices drop on Chávez’s ouster? (And rise once again when he was borne back to the presidential palace by a popular uprising Sunday?) The short answer is that Chavez has not hesitated in the past few years to kowtow to OPEC in keeping oil production down and prices high. The OPEC oil cartel—which includes Venezuela and rogue states such as Libya, Iraq and Iran—sets quotas for its member states to manipulate the market and keep oil revenues as high as possible. Because it takes only one major oil producer...
Despite the Saudi advantage, Venezuela tried unsuccessfully to challenge Saudi dominance of the world oil market in the 1990s, exceeding its OPEC quota of 2.3 million barrels per day (MBD) and attempting to rapidly increase production. The Saudis increased their own output by 1 MBD and caused the price of oil to collapse in 1998, causing Venezuela to give up and return to its quota...
Indeed, if Russia and the former Soviet republics are able to hobble the OPEC cartel and smash Saudi dominance, American interests in the Middle East would be the first to benefit. Not only would the despotic House of Saud likely lose power, the ability of dictators such as Iraqi President Sadam Hussein to produce weapons of mass destruction would be seriously degraded. The Saudi monarchy is already contending with a young and restive populace that sees little opportunity in a sclerotic oil-based economy. Without a steady flow of oil money, the totalitarian governments in the Middle East would...
...international market. With Iraq halting petroleum exports to protest Israel’s war against Arab terrorism and the rest of the Arab world urging the U.S. not to invade Iraq and end Hussein’s murderous regime, the conditions are good for a serious challenge to OPEC and the authoritarian governments it keeps in power. Russia and the former Soviet republics are the best candidates to make that challenge. Venezuela’s experience shows that challenging the Saudis is possible...