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Saudi Arabia: What is the Current Oil Trend?
by via NEO.org:
Oil and its price are perhaps the most discussed topic in the world media today. Economists, experts, politicians, and ordinary people put forward different versions of the reasons for such a sharp and sudden decline and are trying to figure out what will happen to oil prices in the future. And life presents new facts that are difficult to fit into the Procrustean bed of any laws.
For example, the growth of shale oil has made the United States one of the three largest producers of oil, along with Saudi Arabia and Russia. And with increased energy efficiency, US oil imports fell by a third. Slowing global growth has led to stagnation and decline in demand for oil in the EU. Since oil is quoted in dollars, the strengthening of the US dollar has not made oil cheaper for Europe.
But in the analysis of the oil market by the characteristics of economics, religion, and politics, we must remember that its main beneficiaries are the four kingdoms of the Persian Gulf: Saudi Arabia, Qatar, Kuwait, and the UAE. They account for half of the oil revenues of OPEC countries. Since 90 percent of the economy of those countries is provided by migrant workers (mostly from East Asia), the economy of these countries also depends on its state.
It is quite clear that the main influence, both in OPEC and the world oil market, is possessed by Saudi Arabia, and so it is worth taking a close look at the kingdom’s oil policy, the more so since recently there the king became a new representative of the House of Saud. In late February, for example, the price of Brent crude oil reached a new maximum for 2015 on the statements from Saudi Arabia about increasing demand. The closing maximum was 62.5 dollars per barrel, with an intra-day high of up to 62.61 dollars. Earlier, Saudi Oil Minister Ali al-Naimi said that the markets are calm now, and the demand for oil is increasing gradually. All this gave rise to Petromatrix analyst Olivier Jacob calling this change of tone one of the main drivers of growth in world oil prices. “No more talk of $20 from al-Naimi,” said the oil analyst.
At the same time, Saudi Arabia has reduced oil exports in 2014 by 5.7% to an average of 7.11 million barrels per day, or the lowest level since 2011. These data stem from the Joint Oil Data Initiative (JODI). Meanwhile, the Saudi oil corporation Saudi Aramco, the largest oil exporter in the world, is in talks with banks on raising a loan of $10 billion. With these funds Saudi Aramco wants to finance new acquisitions and other investments, according to the sources of Bloomberg.
Nevertheless, Saudi Arabia is lowering the prices for March delivery of oil to Asia, offering a maximum discount of up to 14 years. It lowered the official deliverable crude oil prices of Arab Light by 90 cents, and now the price of Arab Light is $2.30 lower than the major brands of oil in the Middle East. Previously, a member of the Saudi royal family, Prince Al-Waleed bin Talal Al Saud, in an interview with USA Today, said oil will never again cost $100 per barrel: “If supply stays where it is, and demand remains weak, you better believe it is gonna go down more. But if some supply is taken off the market, and there’s some growth in demand, prices may go up. But I’m sure we’re never going to see $100 anymore.”
Explaining the reason for the fall of oil prices, the Saudi prince drew attention to the simultaneous presence of two problems: oversupply and lack of demand. At the same time he called the theory that the US and Saudi Arabia have decided to keep oil prices low in order to put pressure on Russia “rubbish”. According to him, Saudi Arabia would not do this under any circumstances, because Saudi Arabia is now suffering as well as Russia. The Saudi government with great fanfare announced its intention to become by 2017 the second country in the field of oil, which in turn will put additional pressure on the oil industry because the market will not only enjoy cheap raw materials, but also petroleum products.
First appeared: http://journal-neo.org/2015/03/07/rus-saudovskaya-araviya-kakoj-ny-nche-neftyanoj-trend/
