Then oil reversed yet again on Friday. This time, it was a combination of news that pushed oil upward. First, there were "several unnamed U.S. Officials" who confirmed that Israel had conducted dry runs with F-15s for a potential attack on Iranian nuclear infrastructure. Iran responded with a threat to the Israelis and the U.S.
Oh, and Nigerian rebels were at it again -- cutting off some pipeline movements due to their continued unrest with oil profit distribution.
Putting a lid on some of that rally was the fact that the Saudi's were holding a summit in Jeddah. Many producing nations were in attendance, including U.K. Prime Minister Gordon Brown, and our own Secretary of Energy, Samuel Bodman. All in all, 35 countries, 7 international organizations, and 25 oil companies were present. Quite an impressive group!
As expected, the producers blamed speculators and surging consumer demand. All agreed that we can manage this crisis with cooperation.
Then, the Saudis offered to supply more oil almost immediately-- very impressive, by the way. They also added that current production of 9.7 millions of barrels per day (mb/d) would be boosted to 12..5 mb/d by next year.
Most importantly, the Saudis said they could produce 15 mb/d soon after 2009 and even outlined which fields would provide the additional oil. That's outstanding news for the world - just my $0.02
The world's supply of oil is in both great shape and capable of increasing by several times the growth rate of demand. That alone will drive oil prices lower over time.