Skip to comments.Saudi Arabia keeps oil tap on for world growth, Russia hurts
Posted on 06/25/2012 1:12:48 PM PDT by Tailgunner Joe
LONDON, June 25 (Reuters) - Saudi Arabia is showing no sign of changing its policy of high oil output to support global economic growth, despite a fall in crude prices below $90 a barrel for the first time in 18 months.
Gulf and Western government sources in contact with Saudi officials said the OPEC power can tolerate oil at $90 or below for months, price levels that hurt Iran and Russia as they face off against Riyadh over the conflict in Syria. ....
"If we keep producing at roughly the same rate, we're not flooding the market," said a senior oil official from a Gulf producer. "And we want to act responsibly for the sake of the world economy."
Strong supporters of fellow Sunni Syrian rebels seeking to oust Syrian President Bashar al-Assad, Saudi leaders have criticised Russia for defending him.
With Iran, Russia is Syria's main ally, providing most of its arms. Both Moscow and Tehran need crude at $115 a barrel to meet budget requirements.
"Russia's economy is vulnerable to a sharp drop in oil prices," said U.S. oil analyst Phil Verleger. "The Saudis may be able to exploit that vulnerability by keeping production at 10 million barrels per day." ....
Crude is down from a March peak of $128 partly because the economic outlook has darkened but also because Saudi Arabia, pressed by major consumer countries, opened the taps in March to a 30-year high of 10 million bpd.
That has made up for a slump in output from Iran because of sanctions, not only drawing criticism from Tehran but others in the Organization of the Petroleum Exporting Countries who prefer higher prices including Algeria, Iraq and Venezuela.
(Excerpt) Read more at in.reuters.com ...
On the contrary. It’s naive to think they are doing this as a favor for us. They are doing it to hurt their Russian and Iranian enemies. This struggle for control of the Middle East is the New Cold War.
Bluff. They can’t keep it up for long without damaging their fields. Look for a tail off in the August time frame - just enough to keep prices down through November.
Also that Saudia Arabia doesn’t have any meaningful industries to speak of. Just oil.
The “floor” in oil prices is about $70/barrel. It costs $60/barrel to produce the oil in the Bakken & Eagle Ford plays; less than $70 and there isn’t enough profit to justify further production. That price could fall with technical innovations, sure, but for now it’s pretty firm.
And $70-80/barrel is fine with me so long as we get a government that will allow domestic production.
I still think the One told the Saudis to keep the price of oil low until after the election. He was talking a lot of heat over the high oil prices earlier this year.
Obama is doing all he can by destroying the oil industry by forcing oil prices downward and abolishing drilling for oil in the USA.
“The floor in oil prices is about $70/barrel. It costs $60/barrel to produce the oil in the Bakken & Eagle Ford plays; less than $70 and there isnt enough profit to justify further production. That price could fall with technical innovations, sure, but for now its pretty firm.”
In other words, the price of gasoline drops significantly, Obama takes credit and at the same time he puts American oil producers out of business which support his envirowhacko agenda.
And no one saw this coming????
While stationed in “The Magic Kingdom,” we called them “sheets.” They’re all wearing them. That’s NOT a compliment.