12/24/2008 05:12 am ET Updated May 25, 2011

Oil Piracy, OPEC, Saudi Arabia, You and Me

With the hijacking of the Saudi oil tanker Sirius Star and its 2 million barrels of oil, the foreign minister of Saudi Arabia Prince Saud al-Faisal was moved to comment, "Piracy, like terrorism, is a disease which is against everybody and everybody must address it together." Spoken in the best Saudi parlance to which the most generous translation one could ascribe is, "Uncle Sam (with 20 plus ships operating in the Persian Gulf to east Africa including three super-carriers, the USS Abraham Lincoln, USS Ronald Reagan and USS Theodore Roosevelt), let me hold your jacket while you go ahead and tackle this mess for us, and when you've done what you've had to do, don't forget to thank us for helping you forgo a cleaning bill for your jacket."

The hijacking of a Saudi 318,000 ton VLCC (Very Large Crude Carrier) came after a series of chastising pronouncements from OPEC evidencing indignation at the recently swift setback in the price of oil.

- In October OPEC members agreed to reduce supplies by 1.5 million barrels per day from November 1, or about 5 percent of their then daily production.

- On November 8th OPEC President Chakib Khelil announced that OPEC would reduce output of oil further if moves the previous month to slash production did not effectively bolster plummeting oil prices. That "prices should range between $70 and $90 per barrel."

- OPEC concurrently issued a statement reading "In the extremely volatile situation closer monitoring and more frequent intervention are required. OPEC will continue to carefully follow oil market developments ... and stands ready to take the necessary decisions to support oil market stability."

- On November 10th CNBC reported that Saudi Arabia's state oil company Aramco had advised at least five customers that they would receive 5 percent less than their "contracted allocation" (some contract).

- In the meanwhile as the speculators were routed and the economy was collapsing. the price of oil continued to sink, breaking $60 a barrel, (and now $50 a barrel) more than $87 below its summer high of $147/bbl.

- And then, on November 16th, as if by fortuitous fortune if you are long the oil market or if you are an OPEC producer and searching for a good reason to frighten the market one more time and to give a positive spin to oil prices, well hosannas! -- for the first time ever an unguarded Saudi Aramco oil tanker displacing 318,000 tons (the size of a small island) and sailing in splendid isolation 450 nautical miles off the Kenyan coast, is picked off by a band of pirates operating a motorized dinghy.

Coincidence?? You judge. And the fact that it didn't break the fall in oil prices is no fault of the pirates.

In fairness, Saudi Arabia did announce on Friday that it will join the NATO naval mission together with ships from India, Russia, Malaysia, by "contributing naval assets to help pursuing piracy."

Public relations ploy or serious commitment remains to be seen. Word and deed are too often at variance here to be taken at face value. One need only go back to Saudi Minister of Petroleum and Natural Resources Ali al-Naimi's proclamation in 2004. At that time he declared himself still in favor of the cartel's then $22-to-$28 price range, adding "the market desires a price of $35 a barrel because it is frightened of {the price rising to $50," and that the Saudis too were "frightened of that price." That was then and in the four years thereafter in oil's inexorable march to $147, the Saudis did little to stem the world's economic pain but continued to exacerbate oil price's excesses by steering OPEC to cut its production quotas again and again.

Were the Saudi announcement to be a serious commitment, it would be a welcome change in policies that have been blatantly self-serving. It would be a welcome recognition of its obligations as the custodian of the world's largest oil reserve, thereby vesting it with weighty responsibilities of prudent stewardship.