Zero Hedge – Can Saudi Arabia Really Lower US Gas Prices Ahead Of The Election?

One of the more curious conspiracy theories that has appeared in the past 24 hours, or since yesterday’s so far unexplained crude oil flash crash without a subsequent corresponding jump (those only happen in equities it appears), is that Saudi Arabia has decided to come to the aid of the Obama administration two months ahead of the election, and to pump enough crude into the system to offset the pricing in of the inevitable liquidity tsunami from the now global QEternity, or at least until such time as the election passes. Partially confirming this speculation was the FT’s report that Saudi Arabia has offered its main customers in the US, Europe and Asia extra oil supplies through the end of the year, a sign the world’s largest exporter is worried about the impact of rising prices on the global economy. Reuters adds, citing a Gulf source that “We would like to see the price coming down and we are working to bring it down… The price now, we believe is high, and it’s not supported by fundamentals at all. It’s just speculation and geopolitics.” “The majority of OPEC countries prefer around $100, including Saudi Arabia,” he said, adding that $100 per barrel was “right now the ideal price for the majority of OPEC countries … the majority is all except one or two.” “We think the oil market is well balanced,” the Gulf source added. This comes a day after fellow OPEC member Iran, whose output has been substantially curtailed in recent months as a result of a global embargo (with notable exemptions for key Iran clients India and China) made it clear that it would be happy with crude rising to $150 for obvious reasons. Obviously Iran is in the “minority” according to the Gulf source. And while the reasoning for Saudi Arabia to do all in its power to promote amicable relations with America’s leadership is easily explainable, it is far less clear if Saudi Arabia can actually do much if anything to really prop up crude production, prop down the price of crude and gas at the pump, and support Obama’s reelection chances.

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