one stream cascading from mountain slopes the view is miss mirage. this duty brings death at a speed of more than two hundred kilometers per. step to launch one on. our six thirty pm here in the russian capital you with us to our top stories now greek police fired tear gas at thousands of protesters who are furious up harsher cutbacks to qualify for yet another international aid package. prague is pulling out all helping america's european missile defense shield by refusing to host facilities and. iran it confirms to russia it has no plans to possess nuclear weapons some of this during a key summit of asian. passing us

a drone attacks allegedly killed scores of civilians in yemen while the u.k. readies helicopters on commandos for action in the rest of country. are you with are here live from moscow would back with more news soon. hungry for the full story we've got. the biggest issues get a human voice face to face with the news makers he. can. think of. a low end welcome to cross talk i'm peter all about it is being described as one of the worst meetings we have ever had is the organization of petroleum exporting countries or opec in crisis if it is doesn't really matter and with or without opec are we destined to live with very high poil prices. can.

cross-talk the controversial role of opec today i'm joined by bill found price in london he is the founder and c.e.o. of petroleum policy intelligence also in london we have so many cherish l.-a he is a founding partner of the energy management institute and in boston we cross to robert kaufman he's director and full professor in the center for energy and environmental studies at boston university ok gentlemen this is cross cross talk rules or the fact you can jump in anytime you want but before let's take a look at how the world has been reeling since opec's last meeting. when last week's opec meeting ended in this court for the first time in two decades it left oil consuming countries and alyson of their speculations about the cartels imminent demise and fears of higher oil prices have abounded after the arab spring changed the political landscape in the middle east exposing deep divides among opec's

twelve member he. was normal when iran thwarted saudi arabia's attempt to raise production quotas it became evident that the group was anything but united poised to assert its influence in the region rapidly changing due to popular uprisings and sectarian turmoil iran defied saudi arabia's proposal to change production policy but aim to add one point five million barrels of crude a day to the market venezuela maybe and five other members chimed in blaming high oil prices on speculators this saudi arabia does go ahead raise your production you could really we could be looking at the end of all take right now what is the world braces for saudi arabia to act which had said it would analysts warn that higher crude prices could seriously threaten an oil market already strained by its higher supply from a battle of libya though the head of opec sought to assure that the market was flush with oil and there was no reason for concern in the production of this time

no. we have enough should be on the market. you know with the options of. one country the u.s. which has been hoping to cash in on its partnership with saudi arabia and drive down the price that has surged by twenty percent in the last year was displeased with the outcome of the meeting white house spokesman jay carney insisted the current supply did not match the demand and so the country could be looking to tap into his strategic reserves others have sought to assure that in reality the stalemate means little and that opec members are already putting more oil on the market and there is a great quote as prescribed everybody is cheating everybody. but . so should their lives were dismissed altogether the world has already watched opec whether war between two of its member countries iran and iraq as well as the invasion of kuwait in one nine hundred ninety and one fraught meeting is scarcely

enough to dispense half century old organization or is it will seem december when the twelve members need to prove they can still serve its purported function of ensuring a stable oil market charney for across our team. ok dominic if i can go to you first in london is opec in crisis because ever since. there's no crisis in opec there's no crisis in opaque everything is fine it sounds like they're protesting a bit too much what is the state of ok right now. well i think i don't know how to call it a crisis i would just call it a. further pushing of saudi arabia you know doing what they want to do i mean for the last some years it's almost been everything that kids don't in opec and saudi arabia actually does it because they have the capability of supplying more oil to the market and they've basically been getting consensus from opec. at this stage of the game it seems that the more price hawks within opec those that do not have the

capability of adding surplus capacity into the marketplace i guess i'm just tired of sanctioning saudi arabia and i think in the long run i think it's good for the consumer it's actually good for saudi arabia because at least until the summer saudi arabia can act upon their own instincts is to put more into the market if they see fit to do that which in fact they said they will do and there's no reason not to believe that they won't do that so i think opec what that is really you know it's not not if you ever going to cartel it's much more of a burden sharing organization in that you know saudis continue to take most of the burden and so at the end of the day they are the ones who want to have a lot more say in what's going on and you know they just think it sanctioned this time but i think one of the opec's going to go away but i certainly do not think that it's going to be or have the level of relevancy it's had as an organization until which time that we get into a massive downturn in in the need for opec oil doesn't look likely until it's very

interesting because if you look at the history of ok complex only seems ever get its act together when there is a crisis when prices are going down now when there are high prices so i mean is it going to take that for opec to find some kind of cohesion again. you know no i think you're absolutely right because a much better history of. prices a week and when they need to cut production and when prices edging higher when we only just as recently as two thousand and eight was proud to be financial crisis we saw that they let prices get away on the upside. you could present a reasonable debate about how much oil prices because of the the financial crisis but the argument clearly is that they're slightly more tolerant of viral prices and they are low so i think if you look at the history of crises that opec's been through where you had the iran iraq wars in the eighty's you've had the gulf war in the ninety's you know i think this is actually pretty small beer on the overall

overall. you know limits of the sort of political involvement they have of each of the big but at the end of the day you can be sure that even if i didn't exist it would come into existence because when prices go to these producers hurt. ok robert if i know you want one of the interesting things about this particular crisis you know we want to call it that is that a lot of the major producers are looking a break even point now in their break even point for their budgets are getting higher and higher and higher and we're in every expression if you look at the gulf countries when they have to i'll use my terminology they are their part their populations in light of what's going on with the arab spring so is this one of the reasons you that the price issue is they're not so concerned about is it goes up because they really are they like the extra cash. well you know who do who doesn't like a little greed for money but again. that whole issue of. paying off your population really gets to the heart of the price hawk prices of matter in

it's the prices those who have a relatively small population to pay off and it's the price hawks with larger populations or smaller supplies of oil that really have to kind of wring every little penny they can get out of every barrel in order to keep their populations happy you know many comments of this is just be a grudge match between iran and saudi arabia because we can take the political dimension out in and i think most people through the history of opec is they'd have usually been able to be pretty good at putting politics aside but now it looks like that's not that's changing is that something that's going to stay with us and it could very well be i mean at the end of the day i think the most important matter here is that saudi arabia and to a very minor extent the u.a.e. and kuwait the only ones that really have the capability of driving prices down how much they can drive them down that's a whole nother issue but they are the only ones that can these other countries like

iran and iran it's only role here is to act in an opposite to saudi arabia and yes i think there's politics associated with it and yes i think that the relationship between saudi arabia and the united states is one that probably doesn't favor well with the iranians and several of the other more price works within opec so i think there is some politics here and i think that iran is trying to assert itself by bringing this contingency go ahead jump in. you know there's a lot of politics going on here in iran and saudi arabia have very different interests in that iran really needs all the money you can get to really pay off its population witness what happened last spring witness what's happening with the economy and so any rigged any decline in prices really threatens to undermine the stability of the regime in a way that the saudis are not threatened by slight price decreases and furthermore the saudis and

a couple of these other countries they have huge investments over seas and if we will prices go too high in the and the oil consuming countries go into recession then the saudis are losing their making money on their oil but they're losing money on their overseas investments and so that it's it's a net wash for them so really we're in a zation with very different political positions a dummy can reply and i agree to everything you said ok go ahead dominic well i mean i really just i let me just say what he said. ok bill do you want to jump in there. you know i just wanted to say that you know i totally agree with the other panelists that you know certainly iran has no problem with sticking its finger and making trouble whether it's an opec or elsewhere in the middle east north africa but but but i think there were some genuine economic disagreements at this meeting as well i mean i was spoke to the delegates i think that there is

a concern among. many of the producers outside of the gulf that we're already seeing some oil demand destruction from oil prices and we could be at a bit of a bit of an inflection point here so i don't think it's entirely about politics i think i think it's wrapped up with that but i think that there are some differences in opinion about well prices could go in the second half of this year and where oil demand could go. but i totally agree with the your introductory report which said that you know it's more important to look at what i'd say saudi arabia does rather than opec says and i think that that is the key to this because ultimately as you say you know saudi arabia is the only one with spare capacity so the only one who can at the end of the day and everything else has been pretty much assured ok domini is a shortage is there a shortage of oil on the market here this is a big discussion about that is there really any need for more oil go ahead no not

right now there's not there's not a shortage of war there's a shortage of there's a problem with qualities with a lot of libyan oil certainly that that there are much higher quality oil that has put a strain on north sea oil and some of the oil there but in general no there's no shortage of well right now today the whole discussion is basically looking towards the second half of the year and what the previous panel is just mentioned there has been some demand destruction you know the best the best solution to the high price of oil is high prices because we will get some dollars to study of the me and i'm sure that that's a concern all right gentlemen only one hundred one i'm going to jump in here we're going to a short break and after that short break we'll continue our discussion on opec state authority. that's. the case if. you want to come.

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and heroism look to those who understand it fully but you have to live a. real life stories from world war. nineteen forty five don't achi top cop. keep. welcome back to prosecute a little remind you we're talking about opec and high oil prices. q. ok robert if i go to you in boston i mean opec is a half century old now and what it is is the oil environment changing more than it was then half a century ago there now because we have new players or relatively new players that

are have very large growing economies i'm thinking of china and india which really were not part of that dynamic a half century ago i'm getting at high oil prices there's demand there is this is so hot yeah and continue there for for i mean ad infinitum go ahead well i think change yes you're right there are big changes on the demand side but they're even bigger changes on the supply side and that is for the first forty years of opec's existence. no no impact will production was actually increasing to some degree in lockstep with opec production to keep up with rising demand but since two thousand and four there's been no net increase in non opec production and so what's happened is as it will demand has increased in places like china and india it's all had to come from opec and that's really given opec much greater leverage than it's had during let's say the first forty years of its existence and

now we really are looking at a different environment where it's not where there are alternatives to oil are not readily available and so simply slowing economic growth and demand for oil in india and china is not going to be enough to relieve pressure on prices so no there is no shortage of oil but yes go ahead go ahead dummy could be anything i just mean of the first forty years of opec we lived in a world of a supply constrained model we're clearly in a demand driven model right now and you know how for how long and how do get the ridiculous ok right i think we are in a demand driven model no no no and if you mean you're going to bend it has a global oil demand has not really grown significantly faster over the last five or ten years what's changed is that not opec production has not grown since two thousand and four and so they have to get out of strangers like the louvin have its

capacity of about thirty million barrels a day for the first forty years of its existence and now all the sudden nano type production can expand and now opec is really being called on to expand its ability to produce oil on a day to day basis and that is really what's changed in this environment bill it's very interesting and we started talking about in this program about the demise of opec but it listening to robert here it looks like opec has actually a new lease on life so it's really could be the other way around. well i think i mean i think you got to look at the reserves at the end of the day i mean there's no we know there's no shortage of oil in the ground the issue seems to be these countries ability to to invest and develop all for the future as we stand at current currently there are there are two main countries that seem to be in a position to do that one is saudi arabia and they have a fantastic trial record of achieving that and the other one is iraq iraq has

undoubtedly phenomenal oil reserves the real issue with iraq is political stability and whether we're going to see this country bring on the supplies that it's penciled in in the timeframe that it has i think most serious all around with a little bit skeptical about that at the moment but the real question is you know is there some trees are in fact you know the big problem is outside of you know we see production in the north sea declining we see production in oil opec countries basically fly which really gives opec control over their marginal supply of oil i gentlemen i want to ask all of you want to same question if i'm going to germany first are we living in an era of high oil that will stay high oil high prices are because of that the demand i met imam in diameter that has been mentioned already in this program. i think long term we're going higher without a doubt i think we're going to get some short term blips up and down i don't think

we i mean i think the market's going to struggle a little bit at current levels but i think i look long term down the market i only see higher prices i think the man is going to continue to grow and if prices rise slowly that demand will continue to grow i mean we've got countries like china that are just really in the embryonic stages of its growth right now and it's already. the second largest consumer of oil in the world bill what do you think about that because there's always there's the worry and mr obama is up for reelection and gas prices are always an issue for americans. when you look at opec and high oil prices can't ok afford to see the u.s. and they say the european euro zone going to double dip and still sell their oil because you still have the chinese and the indians i mean that's the dynamic has changed so much even if the west goes into recession you can still have high oil prices. yeah i know i know that we're in a totally counter-intuitive world these days the yeah i think that there are

members of opec you are very concerned about the danger of double dip and the saudi arabia and the other gulf g.c.c. partners were keen to get more oil out there to keep prices under control i mean in terms of your original question where do we see your prices going i i i think that there is a reasonable risk now that we could see some softness in the short term clearly related to the danger of you know growing unemployment you know unemployment is stubbornly high and in o.e.c.d. economies we've got solvent that issues we've got a raft of political risk as well so so i do think that there are problems but longer term i completely agree i mean the supply side is constrained and if we continue to see growth in china which is really really phenomenal double digit growth in or demand and then compounded by incredibly strong demand from the middle east and from latin america and south africa and other countries where mond is

growing above trend certainly way above we see the levels then i think we're going to struggle to find those barrels when you think about that robert i mean it's easy to be we always think of the commanded the the rich west countries needed but i mean if they if they can't get their economies on track i mean the it will all just flow to anyone they want can afford to buy it in like we all agreed in the program having a little bit of extra cash everybody wants that so you mean you might want to be generous make you know you have to it's a year or so you know it is there is no should out there in. yeah it's a world market china and india are now big players but you've got to remember where in absolute terms o.e.c.d. oil demand is actually declining slightly and u.s. demand is basically flat so it's all coming from china and india but even those countries are not immune from recessionary impacts in that if the west goes into recession china and india will be export goods and demanding

a while but in the longer term it's absolutely the case that yes we're going to get a breeze a brief respite from high oil prices every now and then put in the long term things are looking up. well there. what do you what do you think with the instability in the arab world right now with the the arab awakening as people are calling it i mean how much is that going to start putting pressure on our own oil prices as well because i mean i think if we have we you know saudi arabia is not doesn't have a whole lot of friends and if the number of friends it has in the region is declining ok relatively and they seem to be one going on a certain path and i think we ought agree they're not going to reform ok look what's happening in bahrain how much is the arab uprisings impact oil prices at this point. i think to the extent that it it funnels over to saudi arabia it could be huge i think if saudi arabia can continue to isolate itself and kuwait and and its u.a.e.

and bahrain and they continue to isolate itself from from the you know or awakening then i think it's going to have a minimal impact but at the end of the day if it does spread to saudi arabia and saudi arabia loses control then i think you know well bets are off and i going to pray for something because the other day the saudis are producing eight point nine million barrels of oil a day three point six million barrels a day of oil that's available in surplus capacity three point three of it is in saudi arabia so the other day it's a saudi game and if anything it packs negatively to saudi foreign oil it's just a huge huge issue for the consuming world what do you think about that i mean this is where another political angle comes in i mean we we see a lot of criticism of saudi arabia and i'm going to mention bahrain and what not i mean this is a region that is getting more and more volatile and it doesn't look like pro-democracy forces are winning the day at the end at the end of all of this here is this more sectarianism mean how much how concerned should the consumer global

consumer be as this thing continues down that it's inevitable path of change. well i think not much is made of the inevitable part of change but i think if anything. the wave of changes kind of run up against a bit of a big wall at the moment i think part of the reason that we saw prices. slip back a few weeks ago was was that the immediate appearance of threats would saudi arabia seem to faded and i think if you look i don't think there's any more international side fought for getting involved in situations like they have in libya and syria is the proof of that. but the other thing to say is that you know so far the countries that have been affected by this process of this process this political uprising if you like have been not really minor oil producers with the exception of libya and i think that it is significant i do think you have to count up the outages and whisk

sort of risk risk it properly but at the end of the day are we about to see us or kuwait or saudi arabia fall over i think it's pretty unlikely to be honest. robert do you think about what's the political risk in your opinion when we look at the real world it is going head. you know what one of the things i think about is sure in the short term there could be some instability but if if you replace the saudi regime if you replace the kuwaiti regime unless you're going to really replace it with a very radical kind of non market oriented government whatever government takes over is going to have to make sure its people are happy and it's going to have to earn oil revenues and it's if anything changes in these countries are more likely to generate lower oil prices in the medium to longer term than higher oil prices because the way that governments work both in the western world and in oil

producing countries is by basically keeping their citizens economically happy in the way to do that and a lot of these countries is pumping oil and sell it ok everybody wants to make money and i think gentlemen that right out of time many thanks some i guess a day in london and in boston and thanks to our viewers for watching us here on our keith see you next time remember us talk to you. kate.

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