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Why Saudi Arabia, Kuwait, Qatar and UAE will all cut oil output
The Saudi Gazette ^ | December 22nd, 2013 | Albawaba Business

Posted on 12/23/2013 5:33:14 AM PST by thackney

It is projected that Saudi Arabia, Kuwait, Qatar, and UAE would have to reduce their production by 1mmbd to prevent an oil glut and keep prices stable above the $100 a barrel level, the latest NCB monthly review on Saudi economic and financial developments said.

In its Monthly Oil Market Report, OPEC projected demand for its crude to contract by 0.31mmbd to 29.6mmbd in 2014 from estimated 29.9mmbd in 2013. While the geopolitical tension is easing along with improving fundamentals, it is expected that growth in emerging economies, especially led by China, will lessen the decline in demand for

OPEC’s crude, which has been affected by the boom in shale oil production in North America according to an article in The Saudi Gazette.

On the demand side, the IEA estimated that global demand will increase by 1.2mmbd, or 1.3 percent, to 92.4mmbd next year, following data showing US consumption rising to its strongest level in five years. The US fuel use rose above 20mmbd for the first time since 2008. OPEC predicts that demand for its oil in the first quarter of 2014 will shrink by 1.2mmbd against 4Q13.

On the supply side, OPEC’s output fell to a two year low of 30.0mmbd in November. The IEA forecast that output from outside OPEC to expand by 1.8mmbd next year, exceeding global demand growth of 1.2mmbd.

Meanwhile, the 12-nation group, accounting for 40 percent of global supply, decided in the 4th December’s meeting to keep its production target at 30mmbd, which is 1.4mmbd above the expected demand of the group’s crude in 1Q14, according to IEA.

Saudi Arabia, OPEC’s largest oil exporter, produced 9.65mmbd in November.

Iran’s production averaged 2.6mmbd last month compared with 3.6mmbd at the end of 2011, but it aims to boost its oil production to 4mmbd in 2014 if sanctions are lifted. In return for restraining its sensitive nuclear activities, the interim agreement reached recently with the Western countries pledges to ease a limited number of sanctions on Iran, which include penalties on trade with Iran on gold, petrochemicals, and a European Union ban on insuring Iran’s oil shipments. Iraq, which overtook Iran to become the second-largest producer, expects to produce 4.1mmbd, nearly 1mmbd higher than its average output of 3.1mmbd in 2013. Libya currently produces only 0.25mb/d, but it intends to restore its production level of 1.5mmbd upon resolving its political issues.

Brent crude prices held steady above $108 a barrel since the start of the year, little changed from $111.7 a barrel in 2012, and $110.9 a barrel in 2011.

Recently, prices are drawing support from demand growth hopes at the US after industry data showed a fall in crude stockpiles. Expectations of a fall in US crude inventories are supporting the WTI, reaching $97 a barrel, while easing demand because of refinery shutdowns in France are weighing on Brent, narrowing the spread between the two, which is currently under $11 a barrel.

However, excess supply, attributed to US shale oil and a potential resurgence in exports from Iran, Iraq, and Libya may push prices lower in 2014 if productions cuts by other OPEC members are not made.

The price of oil edged closer to $100 a barrel Friday after the US government said the economy grew at a faster rate in the third quarter than originally estimated.

Benchmark US oil rose 28 cents to close at $99.32. For the week, oil rose about 3 percent, largely because of signs of improvement in the US economy. The last time oil closed above $100 a barrel was Oct. 18.

Brent crude, a benchmark used to price international crudes used by many US refiners, rose $1.48, or 1.3 percent, to close at $111.77.

In other energy futures trading, natural gas dropped 4 cents to $4.42 per 1,000 cubic feet (28.32 cubic meters).


TOPICS: News/Current Events
KEYWORDS: energy; kuwait; oil; opec; qatar; saudiarabia; unitedarabemirates

1 posted on 12/23/2013 5:33:14 AM PST by thackney
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To: thackney
OPEC wants to gain control crude oil after major loss after fracking oped up world recourse.
2 posted on 12/23/2013 5:36:56 AM PST by mountainlion (Live well for those that did not make it back.)
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To: mountainlion

Cutting their output means they will produce an even smaller share of the world oil supply. They can still effect price, but it will take a bigger and bigger percentage of their production to do so.


3 posted on 12/23/2013 5:39:01 AM PST by thackney (life is fragile, handle with prayer)
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To: thackney

They can still effect price, but it will take a bigger and bigger percentage of their production to do so.

It may take more clout than OPEC has to regain market share. If the US government opened drilling they could collapse the world price which would be good for us but the government would lose the dictatorship on energy.


4 posted on 12/23/2013 5:43:49 AM PST by mountainlion (Live well for those that did not make it back.)
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To: thackney

The day these Mohammedan SOBs are forced to drink their damn oil and eat their damn sand will be the happiest day of my life.


5 posted on 12/23/2013 6:19:18 AM PST by ZULU (Impeach that Bastard Barrack Hussein Obama the Doctor Mengele of Medical Care)
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To: ZULU

Question: Will domestic drillers continue drilling when it goes down below $100/barrel?


6 posted on 12/23/2013 6:48:34 AM PST by DIRTYSECRET (urope. Why do they put up with this.)
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To: DIRTYSECRET

Goo dpoint. Perhaps there is corporate collusion and crony capitalism at work here.


7 posted on 12/23/2013 7:13:01 AM PST by ZULU (Impeach that Bastard Barrack Hussein Obama the Doctor Mengele of Medical Care)
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To: DIRTYSECRET

As the price decreases, the investment rate is going to decrease, baring other changes.


8 posted on 12/23/2013 7:13:36 AM PST by thackney (life is fragile, handle with prayer)
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To: thackney

Good luck overcoming the panic play that we’re likely to see from Venezuela shortly.


9 posted on 12/23/2013 7:19:34 AM PST by Buckeye McFrog
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To: thackney
Why Saudi Arabia, Kuwait, Qatar and UAE will all cut oil output

Why they won't: they need the money to keep their ultra-luxury welfare states going. If the money dries up, they implode.

10 posted on 12/23/2013 7:19:50 AM PST by Steely Tom (If the Constitution can be a living document, I guess a corporation can be a person.)
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To: Buckeye McFrog
the panic play that we’re likely to see from Venezuela shortly

Would you explain what you are expecting?

11 posted on 12/23/2013 7:20:39 AM PST by thackney (life is fragile, handle with prayer)
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To: thackney
>>> Why Saudi Arabia, Kuwait, Qatar and UAE will all cut oil output And why isn't the DOJ going after this for transparent collisional price fixing??
12 posted on 12/23/2013 7:52:18 AM PST by SIRTRIS
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To: SIRTRIS

Choosing not to sell your product when the price to your liking isn’t exactly price fixing. Nor are these nationalized oil companies under US jurisdiction. They are a minority of the market these days, a large chunk, but not a majority.


13 posted on 12/23/2013 8:05:43 AM PST by thackney (life is fragile, handle with prayer)
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To: thackney

As socialism collapses in Venezuela they are getting so desperate for hard currency they are going to have to beg the oil companies to come back and DRILL BABY, DRILL as their last, best option.


14 posted on 12/23/2013 8:24:01 AM PST by Buckeye McFrog
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To: Buckeye McFrog

I don’t think you are going to see the majors lining up to invest in Venezuela shortly. Eventually, but not much in the near future. Too many little guys have had their equipment “nationalized” when the government got behind in payments over the last few years.


15 posted on 12/23/2013 8:28:24 AM PST by thackney (life is fragile, handle with prayer)
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To: thackney

Hey, they have a right to do whatever they want with their oil. But why the USA (under both Bush and Obama) should keep protecting and coddling these d-bags is way beyond my understanding.


16 posted on 12/23/2013 12:16:16 PM PST by Notary Sojac (Mi tio es enfermo, pero la carretera es verde!)
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To: DIRTYSECRET
I would venture to guess that if they can reduce the cost even farther for a barrel of oil with more efficient ways of drilling and newer technologies, I would say , yes ? maybe ?
17 posted on 12/23/2013 3:55:48 PM PST by American Constitutionalist
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To: AdmSmith; AnonymousConservative; Berosus; bigheadfred; Bockscar; cardinal4; ColdOne; ...

Thanks thackney.


18 posted on 12/23/2013 6:33:40 PM PST by SunkenCiv (http://www.freerepublic.com/~mestamachine/)
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