Let me be very clear here: when I arrived 10 years ago the conventional wisdom was that Saudi Arabia had 12.5 million barrels per day of capacity, reserves, storage, and production. It never lived up to that expectation.
not correct. At that time SA had announced all of the planned megaprojects which would bring their spare capacity up to 12.5 MMB. Those projects were not finished commissioning until 2010 (exception Manifa which was put on hold). The whole reason for the megaprojects were that SA got caught with their pants down when oil demand had soured to unprecedented levels....they had done nothing to work on spare capacity and hence were not able to fill the needed gap.
It is pretty clear from all of the evidence that the projects were completed on time and given the billions of expenditure involved were not accomplished for "show".
Years ago I said that the only proof one would have that SA did not have the spare capacity they suggest is if there was a call for more oil and they could not deliver. This never happened and to the contrary they stepped up to the plate to offset much of the oil production lost from a post-Gaddafi Libya.
Now reasonable conventional wisdom has it that SA should pump 12.5 mbpd in order to restock its own financial coffers, offset the damage to its own economy from collapsed oil prices. But it can not.
why would they want to collapse the price? The plan seems to be to only produce as much as is needed to keep the price at a level where 1. they maintain their market share and 2. their largest competitors US shale and Russian production are seriously disadvantaged. Producing more hydrocarbons beyond that would simply be shooting themselves in the foot.
As to them being broke....hardly. By all accounts they still have around 500 billion in reserves and no debt. They also have only just started on what they call "austerity" programs which in reality are a bit like choosing to buy a cheaper brand of cavier rather than deciding to subsist on bread and water. Saudi Arabia has many options open to them .....international debt, opening up their internal markets further, sale of state corporations etc. I don't think there is much chance of them being on the bread line anytime soon.