Obama Can’t Bring Gas Prices Down, but Maybe the King of Saudi Arabia Can

Saudi Foreign Minister Prince Saud al-Faisal speaks during a press conference after meeting his German counterpart Guido Westerwelle on March 11, 2012

Photo by Fayez Nureldine/AFP/Getty Images.

Political hubub aside, the president of the United States can’t really control world oil prices. But it’s possible that the government of Saudi Arabia can:

In a matter of days, Saudi Arabia has hired the largest number of super-tankers in years. When the tankers load their cargo in Ras Tanura, the world’s largest oil terminal, in the next couple of weeks and start a 40-day voyage towards the US Gulf coast, they will deliver a wall of oil with a single aim: to bring prices down.

“This is the first time in several years for [Saudi Arabia] to hit the market with such volume—and in such a short time frame,” says Omar Nokta, a shipping expert at specialist investment bank Dalham Rose & Co.

In the OPEC heyday, this is how things worked. Saudi Arabia liked oil prices high (profits!) but not so high as to push oil importers to enact major conservation measures. So demand spikes or supply disruptions elsewhere would be offset by increased Saudi oil shipments. The conventional wisdom has become that the Kingdom no longer has the kind of “spare” production capacity needed to make this work, but the Saudis are not really known for their transparency so it’s possible the CW is wrong.