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Page added on July 30, 2015

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Saudi Arabia to Cut Oil Production After Summer

Production

The world’s top crude-oil exporter, Saudi Arabia, is planning to pull back from record-high levels of production at the end of the summer when domestic energy demand subsides, according to people with knowledge of the matter.

The reduction could begin as soon as September and would amount to about 200,000 to 300,000 barrels a day, bringing production to about 10.3 million barrels a day, the people said. Saudi Arabia told the Organization of the Petroleum Exporting Countries that it produced 10.56 million barrels a day in June, a record high.

“It is purely based on the [domestic] demand situation,” one of the people said, adding that “production is likely to hover around” 10 million barrels until the end of the year.

 

Saudi Arabia—one of a handful of countries that generates electricity by burning crude oil—generally reduces production in the fall, when demand for the heavily subsidized energy to power air conditioners cools off. But the upheaval in world energy markets led some to believe this year would be different.

Challenged by oil prices down by half in the past year, the kingdom, along with the Organization of the Petroleum Exporting Countries, abandoned its traditional role of trying to prop up prices with supply cuts. Instead, it has embarked on a production tear, ramping up output to record levels to maintain its share of the market.

The planned reduction likely wouldn’t affect exports and demonstrates that at least part of the kingdom’s recent production figures were related to its domestic-energy needs. Much of the recent production went to Saudi Arabia’s domestic refineries, including the two 400,000 barrels a day refineries it recently brought online with France’s Total and China’s Sinopec.

Saudi production figures are closely watched by oil investors as an indicator of global supplies, as the kingdom produces more than 10% of the world’s crude. Some experts have predicted the world’s top oil exporter would have to produce up to 11 million barrels a day to meet demand for both exports and domestic needs.

But people with knowledge of the matter said 11 million barrels was unlikely.

The country has the ability to produce 12.3 million barrels a day for 90 days, but it has never pumped this much. Saudi output averaged 9.22 million barrels a day from 2006 to 2014, according to the U.S. Energy Information Administration.

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13 Comments on "Saudi Arabia to Cut Oil Production After Summer"

  1. Kenz300 on Thu, 30th Jul 2015 7:02 am 

    Seems like solar would be a cleaner and cheaper way to generate electricity in the desert………

    Their subsidies of oil consumption has led to wasteful consumption practices…..

    It is time for KSA to end their internal domestic subsidies.

  2. steveo on Thu, 30th Jul 2015 8:37 am 

    I’ll believe it when I see it.

  3. BobInget on Thu, 30th Jul 2015 9:12 am 

    Saudi Arabia and its coalition of the deadly will still be bombing Yemen in the fall. Check fuel consumption of F/16’s. KSA is counting on Houthis to throw-in-the-towel before November.

    If KSA manages to destroy the Houthis, they then need to deal with al-Qaeda and ISIS who made major land gains (Yemeni oil) while Houthis were being slaughtered.

    This is also a ‘Pottery Barn’ case.
    Saudi Arabia, the US and six other nations have brought Yemen to Syria status. Millions are on the verge of death. Millions more starving.
    Infrastructure demolished. USA and partners in this horrendous war crime will be forced by world opinion to rebuild Yemen and attempt to take back oil from so called terrorist groups.

    Don’t expect KSA to ‘cut back’ unless bottomless oil wells produce only salt water.

  4. steve on Thu, 30th Jul 2015 10:35 am 

    kenz they can’t end subsidies if they did it would result in chaos in the country…it is just like your solar dream that we can just push a button and switch to solar it is so extensive and problematic that it is just not possible….liberals and conservatives are both dreamers of a different reality….one that worked 20 years ago but not today the paradigm has shifted sorry to say…oh shit wait I forgot kenz300 is a robot created by NSA I won’t get a response from him…

  5. Plantagenet on Thu, 30th Jul 2015 11:29 am 

    1. Obama will give KSA all the F-16s and bombs they need to continue blasting the shia in Yemen.

    2. When KSA drops oil production, it may bring an end to the oil glut and cause oil prices to rise again.

    3. If the oil glut ends in a couple of months, then the US shale industry will stumble back into relevance, and US shale oil production will recover (not that US oil production has fallen much even after half a year of depressed oil prices).

    Cheers!

  6. rockman on Thu, 30th Jul 2015 11:59 am 

    “…the kingdom, along with the Organization of the Petroleum Exporting Countries, abandoned its traditional role of trying to prop up prices with supply cuts.”.

    There has been no “traditional role” of OPEC cutting production to prop up prices. In the early 80’s the KSA cut production to “prop up prices” and as a result saw the inflation adjusted price drop from $107/bbl to $31/bbl. And then the KSA open the taps in 1986 but the result was oil increasing from $31/bbl to $42/bbl over the next 5 years. So that would be an example of the KSA increasing production to drive oil prices up. Yep…that makes a lot of sense. LOL.

    And then from 1990 to 1998 OPEC increased production to only see prices drop from $41/bbl to $17/bbl at which time they reduced production less than 7% which brought prices back up to around $30 – $35 per bbl but didn’t see prices recover to 40+/bbl until 2004 at which time they were producing the same amount of oil as the last time this price was reached.

    Overall with respect to OPEC cutting production to increase the price of oil it has failed. Consider that from 2011 to 2013 OPEC increased production by 1 mm bopd and saw prices increase from $73/bbl to $92/bbl. Is that the picture of it DECREASING production to increase prices? Not what the data shows, does it? The MSM has for so long pitched this fallacy that OPEC has been manipulating oil prices by restricting production I doubt they even question the validity of such foolish statements.

  7. buddavis on Thu, 30th Jul 2015 3:01 pm 

    my favorite is when they say “The saudis will just open the spigots”.

  8. Nony on Thu, 30th Jul 2015 3:25 pm 

    Just because they don’t have perfect power or are not behind every price change does not mean they are not acting to prop up price. OPEC is organized to keep prices up.

    http://arabenergyclub.com/site/wp-content/uploads/2015/02/Seven-Questions-about-the-Recent-Oil-Price-1.pdf

  9. Newfie on Thu, 30th Jul 2015 4:51 pm 

    The Ghawar has to be pressurized with water to make the oil flow. Half of what comes out of it is water. They are damaging their oilfields by flowing too much oil out of them. So are going to cut back before the damage gets serious.

  10. Jimmy on Thu, 30th Jul 2015 5:45 pm 

    Give ’em enough rope and they’ll hang themselves.

    https://www.foreignaffairs.com/articles/africa/calm-storm

    KSA is on the way to Collapse. Iran is gonna paint the walls with ’em, and it’ll be plausibly deniable.

  11. Boat on Thu, 30th Jul 2015 8:05 pm 

    Plant,

    The US has been a huge exporter of weapons since the industrial age. You voting for the other Bush brother? You like that anti spin eh? Bring it, I bet I can find a spot on that linen jacket you wear.

  12. Makati1 on Thu, 30th Jul 2015 11:16 pm 

    The KSA is on it’s last days. The US has seemingly switched sides and will be supporting the oil/gas country, Iran instead of the KSA. If they cut oil production and the US fraking dies out, along with many other fields now in their last years, it should get interesting. Crashing the world economy is a good way to get WW3 going. The resource war to end all resource wars.

    But who really knows what is happening?
    For instance:
    ( all on ricefarmer.blogspot.fr )

    ‘Putin discusses Iranian nuclear deal with Netanyahu in 30-minute phone call”

    “US Defense Secretary: Deal Imposes No Limits on US Attacking Iran”

    “The Unreality of the Iran-Nuke Fight:

    And many more … But for fun:

    “The Military-Industrial Complex Finally Did It——-Invented A Trillion Dollar Plane (F-35) That Will Add Zero Value To National Security”

    I’m glad I’m not paying for it. LMAO

  13. Jimmy on Thu, 30th Jul 2015 11:58 pm 

    The device used in the attack described in the article below was constructed of high explosives, not low grade pipe bomb material. Images of the destruction indicate uniform sized ballbearings were used and not bits of scrap like nuts and bolts. As well the blast was directional, like a claymore mine. This is a turning point in the sophistication of bombings in Bahrain. It was a very well constructed device and a very well planned attack. Also the group claiming responsibility is new. Bahrain is soon likely to be a war zone.

    http://www.efe.com/efe/english/portada/2-police-officers-killed-in-terrorist-attack-bahrain/50000260-2675535

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