Saudi Arabia could ‘flush’ the oil market with a flood of supply to regain control over prices in the face of rising US production, crude expert says
Aruni Soni
Dec 1, 2023, 4:34 PM EST
- Saudi Arabia may “flush” the market with a flood of supply that would sink prices, an expert said.
- That comes as OPEC+ concluded its latest meeting where members pledged voluntary production cuts without giving firm commitments.
- Meanwhile, US crude output has been on a tear this year, hitting new record highs.
Saudi Arabia may flood the market with more oil supplies, reversing its production curbs, as the world’s top crude exporter tries to regain control of prices, an energy market veteran said.
That comes as OPEC+ concluded its latest meeting where members pledged voluntary production cuts without giving firm commitments, prompting oil prices to fall.
“We’ve more or less been saying potentially Saudi needs to just flush this thing out,” Paul Sankey from Sankey Research told CNBC on Friday.
He estimated that Saudi Arabia has capacity to ramp up its output by an additional 2.5 million barrels a day.
For now, OPEC’s de factor leader is trying to prop up crude by pumping less. On Thursday, it extended its cut of 1 million barrel per day into the first quarter.
But Sankey noted Saudi Arabia shocked markets in 2014, when it similarly tried to flush the market by sinking crude prices from highs of around $110 a barrel to $50.
The drop in prices eventually forced higher-cost producers to exit the market as pumping was no longer profitable. Meanwhile, Saudi Arabia continued to pump as it was better able to withstand lower prices. As supplies from its rivals disappeared, the kingdom was able to regain traction over prices.
Advertisement
______________________________________________________
Back then, like today, booming US oil supply is a headache for OPEC and Saudi Arabia. And Sankey said Friday that the oil cartel has “a huge problem with US production levels.”
In fact, US crude output has been on a tear this year, with monthly production hitting a record high in September at more than 13.2 million barrels a day, according to data from the Energy Information Administration.
Source: Markets – Business Insider
______________________________________________________
If you wish to contact the author of a post, you can send us an email at voyagesoflight@gmail.com and we’ll forward your request to the author (if available). If you have any questions about a post or the website, you may also forward your questions and concerns to the same email address.
______________________________________________________
All articles, videos, and images posted on Dinar Chronicles were submitted by readers and/or handpicked by the site itself for informational and/or entertainment purposes.
Dinar Chronicles is not a registered investment adviser, broker dealer, banker or currency dealer and as such, no information on the website should be construed as investment advice. We do not support, represent or guarantee the completeness, truthfulness, accuracy, or reliability of any content or communications posted on this site. Information posted on this site may or may not be fictitious. We do not intend to and are not providing financial, legal, tax, political or any other advice to readers of this website.
Copyright © Dinar Chronicles
