Reporting from Washington - Crude oil prices pulled back from highs not seen since 2008 as leaders from Saudi Arabia to the White House offered fresh assurances that the world wouldn't run short of oil despite violence in the Mideast and North Africa.More at the link.
Oil futures hit $103 a barrel in New York trading Thursday but ended the day at $97.28, down 82 cents. In Europe, oil also fell in electronic trading after nearing $120 a barrel.
Petroleum prices had surged on fears that political unrest in Libya, Egypt and other countries could reduce global supplies — pushing fuel costs higher and throwing the fledgling global economic recovery into reverse.
But energy traders were calmed Thursday by news that Saudi Arabia, the world's biggest oil exporter and OPEC's de facto leader, was in talks with European refiners to fill the gap caused by the disruption in Libya, which pumps about 2% of world oil consumption.
In addition, the International Energy Agency, a Paris-based energy advisor to industrialized countries, said it would tap oil reserves if needed. And the White House said the U.S. and other countries had the ability to act if world oil supplies were constrained.
Saudi Arabia's promises to rein in prices by boosting production might appear surprising given that its economy is almost entirely dependent on oil revenue. And Saudi leaders, finding themselves surrounded by unnerving populist revolts, have been frustrated that the U.S. seems sympathetic to the uprisings.
But the latest assurance makes public what the Saudis have been doing quietly since the fall: gradually increasing production to keep up with growing demand and to damp prices.
Like much of the rest of the world, the Saudis fear runaway oil prices. They understand that prices over $100 a barrel threaten to sap global economic growth and with it, demand for oil. With its vast reserves and infrastructure, Saudi Arabia is uniquely positioned to put a lid on prices, an imperative that politics so far has not derailed.
Mostly, the Saudis are worried about losing the support of Washington amid regional instability. Excellent discussion at the clip above. If Saudi Arabia topples, that'd be on the scale of the Egyptian revolution.
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