Saudis, big oil manipulate prices to their benefit: Analyst

Press TV has interviewed Dean Henderson, Missouri-based author of Big Oil & Their Bankers in the Persian Gulf, to discuss the recent hike in oil prices after the Organization of the Petroleum Exporting Countries (OPEC) announced a possible cut in output.

Following is a rough transcription.

Press TV: What do you say as far as OPEC’s readiness to try to curb output? Now there were certain member states who were sticking to not curbing that production limit. What do you think has changed?

Henderson: Well, I do not think too much has changed really. I think what we are seeing here is just a lot of short covering in oil markets right now. You have had oil just getting pummeled in over the last really month and beyond this it has been long kind of a crash in oil market, so I think what you are seeing here is a balance that is not sustainable.

There is a lot of talk from some of these [P]GCC countries but the bottom-line is initially this was all about punishing Russia and Iran with low oil prices, taking petro-Rubles and petro-Venezuelan bolivars and so forth and devaluing them so these countries lose the geopolitical power.

Nextly, these big oil companies have been buying up already a lot of the small companies, because now these companies are worth less based on their stock value cause these oil stocks have been in kind of a crash mode too. So you had Shell bought BG, the big British company Baker Hughes was bought by Halliburton; in the oil services sector there is talk about Exxon buying Anadarko, there is talk about BP buying Penn Virginia, and there is even talk of an Exxon-BP mega merger which would leave us with three horsemen instead of what I call the four horsemen of oil.

So I don’t think we are there yet as far as a bottom. I think when you see these mergers start to happen I think that is when you are going to see a bottom and furthermore the Federal Reserve needs these low oil prices right now more than ever. Because the volatility in the stock market last week they want to raise interest rates, they know eventually they have to get down to zero just psychologically and the oil lever is about the last lever they have to keep prices down on everything, from food to everything else that depends on trucking and fuel to be moved around.

So I think it is basically a short covering event and I fully expect the oil markets now to hit down and maybe go south of $30 a barrel pretty soon.

Press TV: So you are saying that certain Persian Gulf Cooperation Council members will not agree to curb output?

Henderson: Yeah, I do not know… I did not read the memo but I’m assuming one of those will be Saudi Arabia because, again, the big oil companies are always in cahoots with the Saudis; they always cut these deals that are favorable to both [parties]. These deals may not be favorable to the United States or even England, where these companies are based, but they are favorable for the companies themselves and they are somehow favorable for the Saudis who are cut in to these different schemes that they come up with, whether it is joint ventures or whatnot in the Kingdom between the oil companies and the House of Saud of which there are many starting with Aramco, the biggest oil company in the world.

So I think their interests parallel and I think that is who has been driving down the oil markets; the big oil companies along with the House of Saud and I don’t expect that to change as long as they can wring concessions out of countries and as long as they can keep merging and buying up assets on the cheap on this side of the pond and in Europe.

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