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Focused Question: What are the general types of historical events that can alter the oil market? (Oct. 6, 2003)

"Economy and Politics." Latin Finance Venezuela Supplement: 19+. Sep 1998.

• US $37 billion debt led to an attempt to relieve debt by reducing oil production from 3.37 million bbls/day in February (1998) to 2.85 million bbls/day in July
• 1997 - $2 billion paid by private sector to PDVSA (state oil company) for rights to manage 18 marginal oil fields
• 1997 - government predicted GDP to grow by 6%, oil industry to grow by 9%
• El Nino weather phenomenon, less mild winter, and OPEC raising production quotas led to oil prices falling to 12 year low ($8.43 per barrel)
• $1 dip in price per barrel - $700 million in lost fiscal revenue
• Foreign debt, along with exchange rate, keep climbing
• Oil makes up ~ 25% of GDP, 50% of govt's fiscal revenue, and 75% national exports
• Revenue ($1.2 billion) spent to combat inflation
• High interest rates meant to "stop the outflow of dollars" actually hurt banks and other financial instutitions, spurring further rate increases
  

"WORLD NEWS - LATIN AMERICA AND THE CARIBBEAN: Colombian oil economy hurt by rebel attacks." Financial Times USA Edition: 05. 13 July 2001.

• Guerilla attacks decrease oil revenues, as well as tax revenues
• Part of long-running armed conflict demonstrating public dissent to government
• Production 20% lower than last year, one of largest oil fields paralyzed for more than four months by rebels repeatedly bombing pipeline carrying oil to coast
• Cano Limon operated by US oil company, but most revenues go to Colombia
• IMF set fiscal deficit targets
• Ecopetrol, state oil company, has compensated govt. if it doesn't meet IMF deficit requirements, but soon may be unable to
• 1999 - 845, 000 barrels per day
• 2001 - 556, 000 barrels per day
• Oil largest export - 1/3 of foreign earnings
  

"Iraq spurs policy shift." Petroleum Economist, 70. 3 July 2003.

• Iran and Kuwait's policy shift reflects opening up to international oil companies
• Saudi Arabia - reject current form of foreign oil involvement
• Kuwait - US occupation of Iraq ended 13 yr standstill of Project Kuwait created by fear of invasion from Iraq
• Project Kuwait now commenced, estimated at $7 billion - double capacity at five fields near Iraqi border to 0.9 million barrels per day
• Project Kuwait curtailed by National Assembly, seemingly the valid legislature, which reflects nationalist sentiment against foreign oil involvement
• Iran also seeks opportunity from foreign investment to ass 100,000 barrels per day to production
• Iraq - foreign investment could create 6 million barrels per day, but companies won't invest money until there is stable government