Saudi Arabia ready to raise oil output further to meet demand

26 Comments on "Saudi Arabia ready to raise oil output further to meet demand"

shortonoil on Fri, 12th Jun 2015 9:06 am 



“The strategy is seen as a major factor in the sharp decline in oil prices over the past year.”

Saudi Arabia has raised its production by 0.1 mb/d over the last year according to the EIA. On 91 mb/d that is hardly enough to have much impact on prices. Saudi Arabia’s main objective is to perpetuate the House of Saud for as long as possible. How else is a self indulging Prince supposed to come up with enough money to be able to pave his bedroom in gold bricks? Anyone who believes that the Saudis have any other objective is naive at best; down right stupid is more likely.

More than half of Saudi Arabia’s production has come from one field, Ghawar. The water cut in Ghawar informs us that the field is more than 90% depleted. There can be no question about that! When Ghawar is gone, the oil is gone, and so is the House to Saud. As Mat Simmons said, “so goes Ghawar, goes the world”. Reuters is certainly part of that world. So goes Ghawar goes Reuters. Reuters, and a few self indulging Saudi Princes have a lot in common. Neither have any incentive to tell the world the truth!

http://www.thehillsgroup.org/

Northwest Resident on Fri, 12th Jun 2015 9:47 am 



I love the smell of bullshit propaganda in the morning!

All that increased global demand forcing SA to ramp up production — while at the same time there is an oil glut due to American overproduction? WTF?! Which is it?

If you anticipate that from here on out the propaganda will get more bizarre, the lies more incredulous, the blatant financial fraud more ruthless, then its a sure bet that you won’t be disappointed.

joe on Fri, 12th Jun 2015 10:28 am 



Geopolitically the US is trying to flip Iran and is taking down the only concieveable threat to energy access to bypass Russia namely Syria. As usual playing the Muslims as puppets it’s using Jihad in the same way the Germans tried in WW1. Only with stellar success. If they can have Iran full of rhetoric and little else but acting neutral then that would allow Europe to flourish. Russia would be forced to diversify it’s economy and choose to either allow millions of Chinese workers in to develop it

Plantagenet on Fri, 12th Jun 2015 11:35 am 



@nordent

Your ignorance about economics is showing again.

Its entirely predicable that there will be an increase in demand in a glut—– the lower oil prices stimulate demand. What is surprising here is that the Saudis are promising to increase their production to meet that demand rather then allowing the price of oil to rise.

Northwest Resident on Fri, 12th Jun 2015 11:39 am 



Plant — You’re a puny mental midget and a pathetic troll. Your opinion is less than worthless. You may be a knowledgeable expert of some kind in your own warped mind, but judging by the feedback you regularly get on this forum, everybody else sees you as the complete idiot that you are. Damn, Plant! How do you survive, being so stupid and obnoxious?

Davy on Fri, 12th Jun 2015 11:50 am 



Joe, my take is global business trumps the geopolitical brinkmanship nowadays. While I do not disagree with you I am discounting your idea with the understanding the world is now interconnected in such a way the “Great Games” of the past are less effective. We are seeing unintended consequences of 20th century geopolitical policies in a 21st century of hyper globalism.

BobInget on Fri, 12th Jun 2015 1:00 pm 



Shortonoil says it best: “water cut in Ghawar’

Saudis would’t be pushing oil fields beyond ‘red lines’ for no reason.

F-16 fuels consumption, (2 gallons per second)
7,000 gal/hr, 117 gal/min or 3 gal/sec ‘roughly’. (Using 7 lbs/gal)

7,368 gal/hr, 123 gal/min or 2 gal/sec ‘roughly’. (Using 6.65 lbs/gal)

No wonder “demand” has picked up.

This from April, 2015
WASHINGTON — The U.S. military has begun air-refueling operations for the Saudi-led coalition conducting airstrikes in Yemen, the Pentagon said Wednesday, signaling a deepening of American support for the Arab air campaign.

The Pentagon also said the United States would expedite delivery of ammunition to the Saudis and other members of the coalition who are bombing targets in Yemen. The expedited ammunition has not been delivered yet but will include bombs and guidance systems.

The increased U.S. assistance comes as the Houthi rebels continued their advance on Yemen’s southern port city of Aden, where remnants of the government are taking a stand.

The Saudis said their air campaign has been successful despite the pressure Houthis are placing on the city.

The U.S. Air Force began refueling aircraft on Tuesday, linking up with F-16s from the United Arab Emirates and Saudi F-15s. The planes are refueled outside Yemeni airspace, said Col. Steve Warren, a Pentagon spokesman.

The Pentagon said last week that it had authorized the refueling operations but had not conducted any missions. The Pentagon plans on having tanker sorties available every day for the Saudis and their partner nations in the air campaign.(30)

Wikipedia;
Fighter jets from Egypt, Morocco, Jordan, Sudan, the United Arab Emirates, Kuwait, Qatar and Bahrain are also taking part in the operation. Somalia has made its airspace, territorial waters and military bases available for the coalition to use.[8] The United States has provided ………….

I would say, roughly, this air campaign will use a million gallons of jet fuel per day.

I’ll bet KSA is also buying every nation’s diesel and jet fuel.

The US BTW, is adding six million tax dollars
daily to our debt waging this little ole oil war.

Money may not be an object for the Saudis but
over-pumping may turn out to bring bombing to a halt.

It’s funny, all this time I figured Saudi oil would get knocked out by outside forces.

Plantagenet on Fri, 12th Jun 2015 1:01 pm 



@nordent

Now that your done with your childish temper tantrum, do you have anything intelligent or substantive to contribute to this discussion?

Cheers!

BobInget on Fri, 12th Jun 2015 1:05 pm 



I made a joke but forgot the punch-line.
This Saudi campaign should be labeled
“Suicide Bomb”

Plantagenet on Fri, 12th Jun 2015 1:05 pm 



@Shortonoil

You are exactly right about Saudi and Ghawar. Do you have actual information on the current water cut at Ghawar—-last I saw it was ca. 60% but perhaps you’ve seen more current data on that?

Cheers!

Perk Earl on Fri, 12th Jun 2015 1:33 pm 



My take on the Saudi’s statement is they understand that the MSM takes what they say as the leading indicator regarding increasing or decreasing oil supply in the world, in spite of only increasing supply .01 mb/d over the last year, and therefore they can strongly influence oil price by mere utterances MSM takes as gospel and runs with in articles. This way they don’t actually have to increase exports to influence price and continue to put pressure on US fracked oil suppliers.

GregT on Fri, 12th Jun 2015 2:00 pm 



The MSM is scripted, for the most part. They are telling us what they have been told to tell us.

rockman on Fri, 12th Jun 2015 2:04 pm 



How do most US operators respond to lower oil prices: they jump thru their butts to increase production to increase cash flow.

How is the KSA responding to lower oil prices? I’ll let everyone answer for themselves. And feel free to add any secondary motivations. But the fact remains: the KSA is bringing in more revenue by increasing production.

shortonoil on Fri, 12th Jun 2015 2:37 pm 



“All that increased global demand forcing SA to ramp up production — while at the same time there is an oil glut due to American overproduction? WTF?! Which is it?”

It is neither, and this is amazingly simple minded rhetoric. After the fall in prices last year every producer in the world was trying to increase production to compensate for lost revenue. If SA only increased production 0.1 mb/d in the face of a 50% decline in price we can be sure that one, or both of two things happened. Either they couldn’t increase production more, or the market was very, very soft. SA has some of the highest quality crude in the world.

The Etp Model indicates that demand will never again catch up with production. Therefore there will be continued downward pressure on prices. Many producers will be either borrowing, or liquidating assets to remain in business. The more they borrow, or liquidate the more downward pressure there will be on those prices. This is the beginning of the cannibalization of existing infrastructure that we have been referring to for some time. It seems likely that every sovereign state in the world will eventually bankrupt itself in an attempt to keep the oil flowing. The end game will consist of how efficiently those assets can be liquidated, or how brutally!

http://www.thehillsgroup.org/

Northwest Resident on Fri, 12th Jun 2015 2:55 pm 



“demand will never again catch up with production”

That’s a heavy concept to absorb.

But not for simplistic minds. To the glutster, that means there will be an oil glut to crow about daily from now until the internet goes down.

Great. Just great… 🙂

Davy on Fri, 12th Jun 2015 4:04 pm 



Short the end game is how long the global system can survive a bumpy plateau/descent. Without an average 3% aggregate global growth the system cannot overcome the simplest of entropic decay. That 3% growth does not even take into account all the serious predicaments which we talk about daily here. This 3% growth requirements only cover the existing global infrastructure maintenance and accommodation for population expansion.

I personally think there is no growth now only wealth transfer and a mining of our ecosystem endowment IOW we are digging our grave as a species.

The end game is how long confidence can be maintained in the global financial system that keeps everything lubricated with liquidity. Your ETP dead zone is a point in the future that as we approach somewhere the breaking point will be found. My point is the dead zone is the upper limit anything could happen in between.

The dead zone point cannot be predicted but it is there. At some point likely well before the dead zone there will be a snap as the whole system breaks to a lower level of activity.

GregT on Fri, 12th Jun 2015 4:48 pm 



“But not for simplistic minds. To the glutster, that means there will be an oil glut to crow about daily from now until the internet goes down.”

It doesn’t matter how hard, or how many of us try to explain it, planter simply doesn’t have the capacity to figure it out.

GregT on Fri, 12th Jun 2015 4:52 pm 



“The end game is how long confidence can be maintained in the global financial system that keeps everything lubricated with liquidity.”

This is exactly how I see it too Davy. The ship is already sinking, yet almost everyone is below decks in the bar, and they keep ordering more rounds. The hangover is going to be nasty.

Perk Earl on Fri, 12th Jun 2015 5:30 pm 



“I personally think there is no growth now only wealth transfer and a mining of our ecosystem endowment IOW we are digging our grave as a species.”

That’s it, Davy – mostly just chips being transferred from far and wide to higher stacks for a few select golden parachute owners. The greed grab is on. Instead of taking pressure off the accelerator, there’s every intent to take this puppy as high and far as possible before entropic decay forces the whole shebang to fall back to reality.

Mark Ziegler on Fri, 12th Jun 2015 9:29 pm 



Price up in Michigan 20 cents in the last few days. Now at the 3.00 a gallon at the pump.

shortonoil on Sat, 13th Jun 2015 6:25 am 



“Short the end game is how long the global system can survive a bumpy plateau/descent. Without an average 3% aggregate global growth the system cannot overcome the simplest of entropic decay.”

It seems likely that things will continue to decay until some “trigger” event brings it all down. War, natural disaster, financial collapse, plaque, revolution, a thousand things could bring it about. The end of the oil age will certainly collapse it. We are getting less, and less capable of dealing with adversity as each day passes. We are descending into an abject poverty that will make effective response almost impossible.

Plantagenet on Sat, 13th Jun 2015 10:44 am 



@shortonoil

While economic growth in the USA and EU seems to have stalled out, the majority of the world’s population is actually seeing significant economic growth—not the “descent into abject poverty” that you claim. The increase in wealth in China over the last 20 years is absolutely staggering. India is starting down the same road, with its GDP growth last year surpassing China. AND Africa is starting to pick up steam—I was in Africa just a year ago and in areas where the used to be only tribal villages, now you see stores, people on motorcycles everywhere, western clothes, and more and more money. Personally I like the old tribal culture better, but in an economic sense there is now growth in Africa.

Cheers!

Davy on Sat, 13th Jun 2015 11:37 am 



Sorry, Planter, the key to the equation is slowing growth across the board globally leaving a system requiring robust growth destabilized. This is most noticeable now in the oil markets with demand and supply growth decline/destruction and the financial system with limits to financial easing and interest rate repression. We are obviously in a state of diminishing returns across the board to our ability to grow and suffering the consequences system wide.

Another issue is the use of the word growth. Much of the growth you mention in Asia was actually long term destructive growth that was in effect bad debt and mal-investment. Resources were wasted on the wrong development and their ecosystem destroyed in cancerous industrialization. These debts are now coming due yet at the time they were created they were considered growth. This is the biggest lie man has ever played on himself. Our growth we consider glorious divine progress is actually our digging our own grave.

GregT on Sat, 13th Jun 2015 12:23 pm 



“While economic growth in the USA and EU seems to have stalled out, the majority of the world’s population is actually seeing significant economic growth—not the “descent into abject poverty” that you claim.”

Actually Claudia,

According to the IMF:

Global Economy Still Struggling to Get on Track

The pace of recovery is disappointing and uneven with global growth projected at a lacklustre 3.3% in 2014. In advanced economies, legacies of the boom and subsequent 2008-09 crisis still cast a shadow, while several emerging markets are adjusting to lower medium-term growth.

Risks Have Increased

*Uneven fragile growth
*Risks from protracted low inflation
*Financial sector excesses
*Simmering geopolitical tensions
*Emerging markets slowing
*Surprises in monetary policy normalization

Downside risks have increased since the spring. Shortterm risks include a worsening of geopolitical tensions and a reversal of recent risk spread and volatility compression in financial markets. Medium-term risks include stagnation and low potential growth in advanced economies and a decline in potential growth in emerging markets.

Given these increased risks, raising actual and potential growth must remain a priority. In advanced economies, this will require continued support from monetary policy and fiscal adjustment attuned in pace and composition to supporting both the recovery and longterm growth. In a number of economies, an increase in public infrastructure investment can also provide support to demand in the short term and help boost potential output in the medium term. In emerging markets, the scope for macroeconomic policies to support growth if needed varies across countries and regions, but space is limited in countries with external vulnerabilities. And in advanced economies as well as emerging market and developing economies, there is a general, urgent need for structural reforms to strengthen growth potential or make growth more sustainable.

http://www.imf.org/external/pubs/ft/weo/2014/02/images/WEOinfo_1099.pdf
http://www.imf.org/external/pubs/ft/weo/2014/02/

GregT on Sat, 13th Jun 2015 12:48 pm 



As usual, the economists are ignoring basic laws of physics, and the limits to growth.

Oil is not just like any other commodity. Oil is the energy source that drives economic growth. It is not the volume of the oil that matters, it is the overall energy available to society, and the cost of that energy that matters.

apneaman on Sat, 13th Jun 2015 1:10 pm 



Planty, the devil is in the details. Half of the world lives on $2.50 a day and some even less. The price of a starbucks Grande coffee. Who cares what the numbers show if an ever growing majority of that money is going into the hand of a few parasitic cunts? Your religion is almost dead – suicide. I don’t know what is more revolting the global elite or their pathetic little cheerleaders like you Plant.

Over a billion live on less than $1.25 a day: Oxfam

http://www.thehindu.com/todays-paper/tp-international/over-a-billion-live-on-less-than-125-a-day-oxfam/article6803398.ece

Oxfam: 85 richest people as wealthy as poorest half of the world

http://www.theguardian.com/business/2014/jan/20/oxfam-85-richest-people-half-of-the-world

Richest 1% will own more than all the rest by 2016

https://www.oxfam.org/en/pressroom/pressreleases/2015-01-19/richest-1-will-own-more-all-rest-2016