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The Wall Street Journal; High Drama, if Not More Oil, Expected as OPEC Gathers

November 10, 2007; Page A2

With oil prices tickling the historic $100-a-barrel mark and politicians urging producers to loosen the taps, the timing couldn’t be better for next week’s rare gathering of OPEC heads of state in Riyadh, Saudi Arabia. Right?

Well, not so fast.

The summit of leaders of the Organization of Petroleum Exporting Countries — only the third of its kind since the cartel’s birth in 1960 — is sure to make for some splendid theater. Iran’s feisty president, Mahmoud Ahmadinejad, will be there. So will Venezuela’s chest-thumping leader, Hugo Chávez. Both could take verbal shots at the U.S. for the Iraq war or other perceived infractions, a move that would make things uncomfortable for Saudi Arabia’s King Abdullah, summit host and longtime U.S. ally.

But don’t expect OPEC’s presidents and potentates to plunge into the nitty gritty of supply and demand, or to huddle over whether to boost output in coming months.

For one, basically all of the OPEC countries are in rare agreement that they are not to blame for the recent price spike, which has seen the per-barrel price of the high-end U.S. benchmark crude rocket to nearly $100 from just under $50 in early January. OPEC supplies around 40% of world oil demand, which now stands at around 85 million barrels a day.

When they last met in September, OPEC oil ministers agreed to boost output by 500,000 barrels a day starting Nov. 1. And look what happened — oil continued to head skyward.

The issue, OPEC argues, is not too little oil on the market. It’s speculators, the falling dollar, and logistical bottlenecks in the supply chain that are jacking up the price.

So the group insists it will address other things while in Riyadh: energy conservation, the environment, preserving a balanced oil supply. The summit’s slogan is nothing if not alliterative: “Providing Petroleum, Promoting Prosperity and Protecting the Planet.”

If you want real policy decisions, OPEC officials say, wait till early December, when the group’s oil ministers convene for their quarterly session, this time in Abu Dhabi, the United Arab Emirates.

There are other reasons that OPEC’s heads of state will probably shun the supply issue. Messrs. Ahmadinejad and Chávez form the core of an inner club within the group that wants to make all they can from their slowing export stream. It’s not in their interest to endorse a supply increase right now to bring down oil prices and quiet critics in Washington.

Some oil analysts are predicting that OPEC will powwow over the supply issue, and could even announce an output increase while in Riyadh. Its rationale: That the falling dollar, jitters in the world’s stock markets, and the growing mortgage-lending crisis in the U.S. could touch off an economic slump, particularly in the U.S., the world’s largest oil consumer. That’s a formula that OPEC is keen to avoid, so announcing an output boost might calm the waters a bit.

So far, Saudi oil minister and de facto head of OPEC, Ali Naimi, is staying mum. Only Saudi Arabia has real capacity to spare, meaning that Mr. Naimi controls the tap that matters most. So all ears will be perked for whatever he says.

Write to Neil King Jr. at [email protected] and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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