TOM BOWER
The Squeeze
Oil, Money and Greed in the Twenty-First Century
To George and Sylvia Bower
CONTENTS VIENNA, 28 MAY 2009 Despite the crowds of journalists and TV cameras jostling in the small entrance hall of OPEC’s Vienna headquarters, the atmosphere was mellow. After the frenzy of oil prices soaring and then crashing during 2008, the arrival of Ali al-Naimi, the dapper Saudi oil minister, seemed undramatic. The small man was smiling after his 20-minute walk from the Grand Hotel, but his serenity was deceptive. Known as ‘Mr OPEC’, or the leader of the Organisation of Petroleum Exporting Countries, al-Naimi had uncharacteristically sought publicity before the 11 members of the price-fixing cartel began their 153rd meeting that morning. ‘We think prices will rise,’ he had puffed during a 6 a.m. run along the Baroque Ringstrasse the previous day. As usual, he was seeking to influence the markets in New York and London. To his satisfaction, over the next 24 hours speculators had bid up oil prices by $1 to $63 a barrel, a 100 per cent increase in eight months. Over the next weeks, al-Naimi hoped, if the speculators could be persuaded, prices would rise by another $20; and then by a further $70 to $150, an all-time high. Billions of dollars had flowed from the Western countries into the oil producers’ coffers in previous years, but al-Naimi was determined to defy economic law. Demand for oil had fallen since the crash in July 2008, record amounts of oil were in storage, and the world had plunged into recession. Yet he was talking up prices. If he was to succeed, he would have to persuade the other OPEC members, an exclusive but quarrelsome club, to endorse his strategy. Unlike the exotic pageant of presidents and kings who had attended OPEC’s meetings during the 1970s, the 10 ministers and their aides who followed al-Naimi into the shiny office block were colourless placemen. Journalists no longer witnessed dramas like Saddam Hussein embracing his bitter enemy the Shah of Iran in 1975 while the stylish Sheikh Yamani, al-Naimi’s predecessor as the Saudi oil minister, hovered in the background. In those days, the dictators posed as brokers of the world’s future. Having wrested control of their oil from the cabal of dominant Western companies known as the Seven Sisters, the OPEC countries had freed themselves of the imperialist, and occasionally racist, attitudes that had formerly dictated their fates. The American and British corporations, blamed for their wilful blindness about realities in West Africa, Central America and the Arab world, had ceased to be the guardians of the common destiny. Nevertheless, oil remained the world’s biggest business. Every aspect of mankind’s lives depended on the refinement of crude oil into energy, plastics, chemicals and drugs. For a century the commodity has been on a rollercoaster, swinging from surplus to shortage. Cheap oil has fuelled booms while high prices have plunged the world into recession. Finding a balance has been elusive. Always the target of mistrust, oil has now become a tougher, more unpredictable business than ever before. In 1975 Anthony Sampson, the redoubtable author of The Seven Sisters, a groundbreaking description of the relationship between the seven major oil companies and OPEC, described the Arab – Israeli war of 1973 as the ‘last battle’ to control the industry. ‘
