The good news is that a barrel of crude is down to $60 from a July high of $147. And this decline to $60 was right after OPEC announced it would cut production by 5% a day, ordinarily a sure-fire to get the costs higher. Not now. Of course, the oil consortium wants to keep petroleum prices up. But OPEC's members are not exactly united in how to go about this. And some countries will sabotage OPEC's efforts by selling more into the market than the comrade governments had agreed to. Who knows, for example, how Moscow will act? It is desperate for cash, and a further decline in the economies of the West will not serve its purposes.
I've believed that even high oil prices do not a cosmopolitan society make. But that's been the pretense radiating from the Arab petrostates for quite a time. The New York Times has supported the proposition editorially for, by now, several years.
The fantasy is now crumbling, as an absolutely riveting article by Margaret Coker and Chip Cummings makes clear in Monday's Wall Street Journal: "Financial Storm Hits Gulf. " Dubai, the phoniest and supposedly the toniest of the fake societies being constructed on sand, is just about broke. This has nothing directly to do with the oil tumble. Dubai has virtually zero oil. The Dubai depression has all to do with the fact that no one will finance anything in the mini- emirate. The banks are afraid of the remaining folk who still want to but real estate in Dubai -not many, as it happens.
The big surprise is Kuwait. Or as the WSJ puts it: "Speculative Currency Trades Plunge Kuwait Into Bank Bailout." It wasn't bad loans that brought down the second largest bank in Kuwait. It was bad currency trading. And where there's one bank there are others.
Kuwait's spending economy may be otherwise be safe. It needs oil at higher than $33 to keep the economy running. Saudi Arabia needs $49 a barrel.
But Iran needs much higher petroleum income, and it is already in deficit. Deep in deficit. What's more, there is rapid (and rabid) inflation, and strikes against it. Maybe that is why Dr. Ahmadinejad had to call doctors to his bedside. May his illness be fatal. And then the National Council of Churches can pray for his soul.