There has been much talk recently about the United States government and the countries of the International Energy Agency preparing to use the strategic oil reserve to bring down oil prices, which have reached $112 a barrel for Brent Crude. The strategic oil reserve of these countries is used to make up for any shortfall in oil supplies for countries. It was used in June of last year by the American government, but without having any impact on prices. Washington used about 30,000 barrels a day of the reserve for a short period of time, without success. Today, as President Barack Obama is engaged in a re-election campaign, he once again wants to give the impression that he is determined to bring down prices and resort to using the strategic reserve. However, the statement issued on Tuesday by Saudi Arabia's oil minister, Ali Nuaymi, saying that his country was anxious about the rise in oil prices, and that it affirmed that this rise had nothing to do with balancing market factors, indicates that the resort by the US and the IEA to using the strategic reserve will not be successful. In his statement, Nuaymi affirmed that markets have enough oil and that Saudi Arabia is determined to adhere to its commitments to taking all necessary measures to guarantee that markets remain supplied with enough oil, and to contribute to seeing oil prices remain at moderate levels, of $95-$100 a barrel. Nuaymi affirms that Saudi Arabia will meet any increase in demand from its customers, and cooperate with the Gulf Cooperation Council and OPEC in order to protect market stability. The monthly economic report by OPEC, which was issued Tuesday, indicates that the OPEC oil basket price rose 17 percent over the last two month, reaching $109 a barrel in August, and it continues to rise. The report attributes this rise to the return of speculation, some shortfalls in supply in the North Sea, the drop in the US' oil reserve, and geopolitical factors in the Middle East. Certainly, the constant talk of the possibility of Israel's launching a military strike against Iran, and Iranian threats that such a strike will lead to Hezbollah waging war against Israel, all contribute to the rise in prices. This is desired by Iran, which saw its oil exports fall by more than one-half because of sanctions. However, its revenues have only dropped by 30 percent, because of the rise in prices. The more that Iran threatens to close the Strait of Hormuz, the more prices rise. The geopolitical factor is important in the rise of oil prices, although it is not the sole factor. The OPEC report, just like this month's IEA report, does not indicate a change in the level of demand for OPEC oil, which continues to drop compared to 2011. In 2013, it will be less than the level for 2012, because of the slowdown in the global economy and in Europe, and the drop-off of growth in China, and the lack of a recovery by the US economy. All of these factors are prompting experts to expect a drop in oil prices in October, while geopolitical threats will keep prices high. In such conditions, there is no need to use the strategic oil reserve in the US or elsewhere, because there are sufficient oil supplies. Saudi Arabia is the biggest oil producer in the world, and it is a responsible state that will not permit a cut-off in oil supplies to markets.
