Saudis to Pump Maximum as Market Share Battle Heats Up

Saudis to Pump Maximum as Market Share Battle Heats Up

Not content with the blow it’s dealt to US oil drillers, Saudi Arabia is set to escalate the battle for market share by raising production to maximum levels.
The world’s largest oil exporter has already increased output to a 30-year high of 10.3 million barrels a day in a bid to check growth from nations including the US, Canada and Brazil. It will add even more to the global glut, according to Goldman Sachs Group Inc. Citigroup Inc. predicts the kingdom will push toward its maximum daily capacity, which the bank estimates at about 11 million barrels, in the second half of 2015, bullfax.com reported.
Saudi Arabia steered the Organization of Petroleum Exporting Countries in November to protect its market share in the face of swelling US crude output, rather than cut supplies to shore up prices as it did in the past. Having abandoned the role of swing supplier — adjusting production in line with demand — the kingdom will maximize sales to increase pressure on producers outside the group, the banks said.

  Historic Role
As result of Saudi pressure, US drillers have reduced the number of operating oil rigs for a record 27 weeks to the lowest level in almost five years, according to Baker Hughes Inc., and oil stockpiles have shrunk as well. Brent crude plunged to a six-year low of US $45.19 a barrel in January following OPEC’s refusal to cut production. The international benchmark has rebounded about 40 per cent since then with the slowdown of hydraulic fracturing in US shale formations. The grade traded at US $62.87 at 3:40 p.m. in London.

  Use Everything
Estimates vary on how high Saudi production might go. Oil Minister Ali Al-Naimi reiterated in St. Petersburg Thursday that his country has about 1.5 million to 2 million barrels of daily reserve capacity and is ready to increase output if demand rises.
The IEA, a Paris-based adviser to industrialized nations, assesses the full capacity at 12.3 million. Saudi Arabia’s decision not to push beyond 10 million during the 2011 crisis in Libya suggests the maximum is closer to 11 million, said Seth Kleinman, head of energy strategy at Citigroup.
“The clear implication of Saudi Arabia’s new oil policy of pressuring high-cost producers is for them to increase production and exports,” Kleinman wrote in an e-mail on June 15. “With an increasingly compelling picture of lower oil prices over the next 10 to 20 years, it makes sense for Saudi to use it all and use it now.”
The number of rigs drilling for oil in Saudi Arabia rose to a record of 81 in April, an increase of more than a fifth since the start of the year, according to data gathered since 1995 by Baker Hughes.


Short URL : http://goo.gl/rDDnzG

You can also read ...

Iran has become an exporter of oil byproducts after years of import.
With the aim of producing Euro-5 diesel in Shiraz refinery,...
ExxonMobil Partners With Pakistan for LNG Terminal
ExxonMobil is working with a group of Pakistan’s large...
BP: Technology to Lower Oil Extraction Costs
Better technology could reduce the average production costs of...
Italy's Eni Promises Richer Returns After Higher Growth
Italian oil major Eni hiked its dividend on Friday and held...
Total is ADNOC’s largest and one of its longest international partners, active in Abu Dhabi’s oil and gas sector since 1939.
Abu Dhabi National Oil Company said on Sunday it has signed 40...
Ardakanian Attends World Water Forum
Energy Minister Reza Ardakanian left Tehran for Brasilia,...
South Zagros Company has exceeded its daily production target by 2.5 million cubic meters.
South Zagros Oil and Gas Production Company, a subsidiary of...