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Arabia

Saudis Ready to Pump Oil After OPEC Collapse

2011-06-11

Saudi Arabia signaled it's ready to deliver on a pledge to boost the supply of oil after the collapse of OPEC talks two days ago.

The world's largest oil exporter will increase production, though it's too early to say by how much, a Saudi industry official with knowledge of the matter who declined to be identified, said today. Al-Hayat, citing senior officials, reported earlier that the kingdom will boost output to 10 million barrels a day in July from the current 8.8 million. Oil fell as much as 3.3 percent, the most in three weeks.

Saudi Arabia "wants everyone to understand that they're serious," Olivier Jakob, an analyst at Petromatrix GmbH in Zug, Switzerland, said today by phone. "It's important that the Saudis are signaling that they're offering additional barrels."

The June 8 meeting of the Organization of Petroleum Export Countries broke down after six nations led by Iran opposed a Saudi plan to replace lost output from Libya and aid the U.S. economic recovery, Saudi Oil Minister Ali al-Naimi said on the day. The kingdom, along with Kuwait, Qatar and the United Arab Emirates, wanted to increase production by 1.5 million barrels a day. OPEC accounts for 40 percent of global supply.
This is as much an attempt to hurt Iran's economy as it to alleviate the economic effects on the rest of the world and the US in particular.

Posted by:phil_b

#7 Maybe we should peg the prices of the food and water we send to Arab countries to OPEC oil prices.

Posted by: JohnQC 2011-06-11 19:52

#6 I seem to recall that the Saudis wanted to increase production to sell to India so India would stop buying from and selling refined crude to Iran - that would be a big thing.

Salt to taste. Heard it a few times

Posted by: newc 2011-06-11 15:26

#5 Mike, the Saudis themselves spread those rumors on the side in order to increase the price of oil. They've got a lot of land they haven't properly explored to begin with, and a lot more that has produced that would be amenable to more modern means of production and workover.

They may be relatively low on the $ 10/bbl production cost oil, but then that means they'll have to move to the fields where it's $ 20/bbl. Which probably means something like $ 60/bbl profits instead of $ 70/bbl or something like that.

Posted by: Thing From Snowy Mountain 2011-06-11 12:33

#4 TW, the Saudis don't need to discourage American attempts to drill at home, our President is doing that just fine on his own...

Dr. Steve, the Saudis have been open about manipulating the market to persuade potential major producers not to get into the game, or to move seriously to alternatives that would make their export less necessary. That our current president Is willing for his own reasons to actively support their effort doesn't change that they've been doing this since the oil crisis back in the 70s.

Posted by: trailing wife 2011-06-11 12:30

#3 TW, the Saudis don't need to discourage American attempts to drill at home, our President is doing that just fine on his own...

Posted by: Steve White 2011-06-11 11:20

#2 ...An interesting thought here is that we've been told for quite some time now that the Saudi reserves are actually less than they've been saying and that their production capacity is maxed out - yet they're saying they will ramp up production 1.2 BPD. What gives?...

Mike

Posted by: Mike Kozlowski 2011-06-11 10:22

#1 This is as much an attempt to hurt Iran's economy as it to alleviate the economic effects on the rest of the world and the US in particular.

Not to mention discouraging American attempts to drill at home.

Posted by: trailing wife 2011-06-11 08:42

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