In theory, the kingdom remains committed to an informal target of $100 for Brent first announced in a CNN interview given by Oil Minister Ali Al Naimi in January 2012. “Our wish and hope is that we can stabilise this oil price and keep it at a level around $100,” Naimi said.

Speaking after a meeting of energy ministers in Riyadh in October, Al Naimi reiterated the $100 figure. “We would like to see the price moderating. Today Brent is $111, I think, or $112, we would like to see it lower, towards $100,” he told reporters.

The kingdom now appears content to live with prices around $110. It is focused on balancing the physical market to avert a bigger-than-usual build up of stocks in the first half of 2013 rather than attempting to push prices back towards $100.

Behind the scenes, the United States and some other members of the International Energy Agency (IEA) reportedly agreed to release oil from the Strategic Petroleum Reserve (SPR) and other government-controlled stockpiles if Brent rose above $120.

In the event, it peaked just below $118 and no stocks were released.

Now the presidential election is past and the US economy has skirted recession there is far less pressure on the kingdom to be seen to be pushing prices lower. Policymakers have therefore reverted to their normal posture of producing to demand.

Prices at $110 are probably sustainable in the short term but not in the medium and long run. The global economy has successfully adapted to cope with $110 oil. Prices are probably hampering recovery rather than pushing the US and the other advanced economies towards recession.

5 Comments on "Saudi targets $110/barrel oil"

BillT on Sun, 13th Jan 2013 1:54 pm 



At the next meeting, they will announce that they are comfortable with $120 oil, then $130, $140, $150, … Nothing new here. They once had a comfort at $20.

China is buying. Payment in ??? Gold?

BTW: There is no “recovery” in the future of the Western countries. None.

Hugh Culliton on Sun, 13th Jan 2013 2:46 pm 



I agree with your assessment Bill. Our economy is changing in ways that will make today look like thye good ol’ days. Along with enlarging my garden and increasing canning / food storage supplies, I’m closing my investment accounts and dropping as much as I can afford into silver.

Kenz300 on Sun, 13th Jan 2013 3:22 pm 



The era of cheap oil is over…….

The life blood of economies and international trade is growing more expensive and slowing both causing business’s and individuals to think more about their energy use and costs.

As the price of oil continues to rise we will all use energy more efficiently. We will walk more, ride a bicycle more, and take mass transit more. The price of energy will also become an important factor in our buying decisions for a new car, truck, appliance, furnace or even a light bulb. That cable TV DVR is a huge energy waster. Just putting it on a power strip and turning it off when you go to bed can save energy and money.

Saving energy saves money. A 40 MPG vehicle is better than a 12 mpg gas guzzler. A high efficiency furnace that operates at 95% efficiency is better than one that operates at 80% efficiency or less. LED light bulbs use 25% of the energy that an incandescent light bulb uses.

There are many ways to reduce energy use. Rising prices will cause us all to think more about how we use energy and what we can do to save both energy and money.

DC on Sun, 13th Jan 2013 4:50 pm 



Didnt we see an article just a few months back saying SA was targeting $100 a barrel as the ‘target price’?

LoL!

MrEnergyCzar on Sun, 13th Jan 2013 10:46 pm 



They have to keep giving money to their people to prevent unrest… the number does keep rising every few months…

MrEnergyCzar