871
Deeper Saudi  Oil Cuts Needed
Energy

Deeper Saudi Oil Cuts Needed

Saudi Arabia will need to keep cutting oil output to sustain prices above $100 a barrel, even after the kingdom’s largest reduction in two years, according to BNP Paribas SA and Societe Generale SA.
The world’s biggest crude exporter told OPEC last week it pumped 408,000 barrels a day less last month, about as much as Australia produces. Output rose in Iran, Iraq and Nigeria, adding to supply that drove benchmark Brent crude futures below $100 this month for the first time since June 2013. Saudi Arabia probably will have to cut a similar amount again to stabilize prices, the banks said.
Global oil demand growth this year will be the weakest since 2011, just as the US shale boom means oil production from countries outside OPEC rises by the most since the 1980s, according to the International Energy Agency. The glut is prompting most of OPEC’s Middle Eastern members, including Saudi Arabia, to cut prices to customers.
Saudi Arabia made the biggest contribution to OPEC’s production cuts in 2008 and 2009 as demand contracted amid the financial crisis. The group took almost 5 million barrels of daily output off the market, reviving prices from about $30 at the end of 2008 to almost $80 a year later.
Brent will average $107 in the fourth quarter and $105 in 2015, according to the median of as many as 31 analyst estimates compiled by Bloomberg. Brent may average $90 in the fourth quarter if Saudi chooses not to keep cutting output, according to Societe Generale’s Wittner.

  No Response Yet
OPEC officials, including Saudi Arabia’s Naimi, have said they see no urgent need to respond to the drop in oil prices, which are still more than twice their level a decade ago.
There may be incentives for Saudi Arabia to let oil continue its decline, according to Bank of America Corp. and DNB ASA, Norway’s biggest bank.
Allowing Brent to fall below $85 could slow the US shale boom because some producers would lose money pumping at that price, Francisco Blanch, head of commodities research at Bank of America, said in a report Sept. 9.
Petroleum exports account for about 90 percent of Saudi Arabia’s state budget. King Abdullah announced $130 billion of investment in 2011 to create jobs and a $500 billion plan to build cities in the desert started last year.

Short URL : http://goo.gl/59Nj24

You can also read ...

Russia Says US Sanctions on Iran "Unproductive"
United States' sanctions on Iran's oil industry are...
China to Cut Solar, Wind Subsidies
China will speed up efforts to ensure its wind and solar power...
Oil Coalition Seeks Consensus Ahead of Algiers Summit
With a critical meeting in Algiers fast approaching, a...
Abu Dhabi Planning Biggest Oil  IPO in Decade
Abu Dhabi is pushing ahead with an initial public offering for...
Crude Prises Higher as Supply Concerns Rise
Oil prices rose on Monday as investors worried about the...
Abadan  Refinery  Second Phase  on Track
The second development phase of Abadan Oil Refinery in...
New Power Capacity for Sistan-Baluchestan
Operations to build new combined-cycle power plants in...
ICOFC to Develop  Eight Gas Fields
Iranian Central Oil Fields Company plans to develop eight gas...

Trending

Googleplus