Saudi's Assure Clinton They Will Not Reduce Production If US & Britain Release Some Oil Reserves To Combat High Prices
Following a meeting in Riyadh with Saudi Arabia's King Abdullah, Saudi Arabia said it would not cut its current production rate of oil should the US, Britain and France release some of their own reserves of oil in an effort to combat persistent high oil prices.
Reuters Reports: "Saudi production will unlikely change from the levels we see now, even if the stocks are released because the stocks will not have an impact," another source familiar with the talks said.
Most analyst agree a release would not affect oil prices in terms of pricing as a result of supply and demand, and republicans have been quick to say this is an election year political game by Obama.
However many investors say while that may be partly true, about $20 of every barrel now is made up of so called "hedge fund speculators" who buy oil contracts for the sole purpose of betting that oil prices will increase and this drives up the price needlessly for consumers. A release of reserves has cause many of these speculators to dump their oil contract holdings resulting in lower prices both at the pump and price per barrel.
The Saudi oil firm Aramco said they would not discount prices either to sell more oil, believing that prices are already to high globally and that only a continuous supply with prices between $80 and $100 are sustainable for global economic growth. Oil has been trading at $120 a barrel recently.
Aramco was originally a joint venture between the US and Saudi Arabia founded in 1933 when large reserves were discovered in Saudi Arabia.