Check out these links to get the perspective of a middle eastern news outlet.

However, RBS issued this last Saturday:
“RBS says no credit pulled from Venezuela’s PDVSA”

This is almost boarderline tinfoil hat stuff, but assuming cnbc was right, maybe OPEC (specifically Saudi Arabit) WANT lower oil prices to come about, that way weaker players like Venezuela and Iran have to cut their own production b/c of a lack of credit?? That would be win-win for SA – supply and demand would go to optimal levels, yet Saudi production would continue (maybe even increase?).

Total speculation, though.

“Be honest, your $20 per barrel argument is more of a self-serving argument than a real proposition”

Dont have any play in oil. Everyone is in la-la land that thinks the present global economy is not entirely dependent on oil. Last quarter of 2007, Dow hits record high, oil hits $80 a barrel, and GDP contracts -0.2. That’s the magic number, the presently structured American economy cannot run above $80 a barrel, we should set it as a floor, actually it would be better higher.

If the economy slows to the extent it did in early 80s, oil will drop to $20 — count on it.

In the meantime, oil companies didn’t fancy to chasing windmills so today’s oil prices hinder alternatives before they even get traction but who has the cash lately to stockpile oil even at these prices?

Probably have to watch the reserve currency as a commodities to paper value controls price.

Vehicle miles in the US started dropping almost immediately after the big oil spike. SUVs have vanished from the roads in my southern Calif neighborhood.

Add to this a consumer recession and the collapse of leveraged speculation, and $50 starts to look believable.

Look at Japan’s GDP per barrel of oil consumed over the last 30 years. There are now alternatives for lowest cost producer of goods against the headwind of expensive oil.

It took a rare confluence to bring addition of new wells and supply against a decline in air travel with still injured shipping due to the Asian financial crisis.

The wells that have been brought on line this time merely keep production at 2003-2005 levels. Be honest, your $20 per barrel argument is more of a self-serving argument than a real proposition

Finally, OPEC matters less in today’s world than it did in 1970 in the sense their portion of global supply has declined. Yet with a dearth of supply to offset declines of fields first tapped in the 1970s, they retain enough power to control the marginal excess supply — so they’re not irrelevant either.

As Yves alluded, Venez. and Iran pretend to define OPEC’s fate when, in fact, SA is in complete control of that fate.

Venezuela is struggling just to meet its own quota, yet they need $90 oil; so while they are the most voiciferous in calling for a cut, they’re actually the last ones that are going to significantly cut their production. A downward price spiral plus a production cut is a double whammy to revenue…of course cut production is supposed to reverese that price spiral, but then again, nobody wants to be the first.

Via platts: “Most member countries will readily agree to output cuts that they will not have to implement, but it will be Saudi Arabia’s response that will really matter,” it said. “With the OPEC basket price around $70/b, the Kingdom did not appear to see the need for a steep cut in its production…”

That said as soon as growth picks up, oil will go up rather rapidly. We do have an energy problem.

If Saudia Arabia’s royal family decides the price of oil will go up, then it will go up. If it decides the price of oil will go down, then it will go down.

It all boils down to a guessing game as to what the Saudi royal family will do.

If one can divine what is in the best interests of the Saudi royal family, or what the Saudi royal family thinks is in its best interests, then one can divine the price of oil. But remember, the Saudi royal family has at its fingertips an order of magnitude more information–geopolitical, economic and geological–than what you and I, or any one of the analysts quoted above, could ever hope to have.