26._OPEC___Surge_Pot_Revised_S08

26._OPEC___Surge_Pot_Revised_S08 - 26 OPEC Surge Pot 1...

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1 26. OPEC & Surge Pot
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2 Overview Mounting surplus of oil going into 1960s Posted price cuts upset the balance Limited OPEC market power Elephants in Algeria & Libya Mattei’s last flight & new competitors Iran vs. Saudi Arabia American oil import quotas
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3 Soviet Strike Soviet petroleum campaign: represented commercial venture & political assault Purpose: Create dependence; weaken NATO; subvert Western oil position in Middle East Krushchev, “We will bury you & also drown you in a sea of oil” Western reliance on Soviet oil. Much lower prices. Western currency in Soviet hands. Only way to beat back Russian oil was to cut prices. Could they? Market or posted price?
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4 Wrath of Monroe Rathbone (“Jack”) Standard Oil of New Jersey met to determine how to cut the posted price Howard Page, the company’s Middle East negotiator, vigorously opposed Rathbone. Rathbone overruled Page and had New Jersey, without any warning or consultation with the oil nations, cut the posted price. All the other major companies followed suit “All hell broke loose”; “glad to get out alive.”
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5 OPEC Oil producing countries were furious Tariki (Saudi Arabia’s oil man) quickly called a meeting of the members of the Gentleman’s Agreement at the Oil Congress earlier. Saudi Arabia, Venezuela, Kuwait, Iraq, and Iran created the Organization of Petroleum Exporting Countries…or OPEC. Defend/restore price; seek consultation; regulate production
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6 OPEC’s Early Years The creation of OPEC ensured companies would not cut the posted price
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