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Page added on December 10, 2014
Saudis won’t cut oil production unless US, Russia also cut production
Saudi Arabia’s influential royal Prince Turki al-Faisal al-Saud has said the kingdom would only consider cutting oil production if Iran, Russia and the US agreed to match those cuts because it wants to protect its market share.
Speaking in London, the Prince who is a senior Saudi royal and the former head of the country’s spy agency, said that the kingdom would not repeat previous mistakes of surrendering its share of the global market for crude to its rivals. His remarks come just days after a controversial meeting of the Organisation of Petroleum Exporting Countries (Opec), when the group appeared split over a decision to keep producing at current levels.
“The kingdom is not going to give up market share at this time to anybody and allow – whether it is Russia, Nigeria, or Iran or other places – to sell oil to Saudi customer,” said Prince Turki, who has also held Saudi Arabia top overseas diplomatic post as the kingdom’s ambassador to the US.
Prince Turki added that Saudi Arabia and other producers would only consider adjusting production if other members of Opec adhered to the group’s quotas and stopped making “under the table” deals to sell crude in barbed remarks apparently aimed at rivals Iran.
The remarks by the outspoken Saudi royal will add to the view that the kingdom – the world’s largest oil exporter – is now locked in a bitter oil price war with the likes of Russia, Iran and shale oil drillers in North America. Oil has fallen by over 30pc since June to trade at around $70 per barrel with some analysts suggesting the level could fall further to as low as $40 per barrel.
15 Comments on "Saudis won’t cut oil production unless US, Russia also cut production"
rockman on Wed, 10th Dec 2014 9:37 pm
“…said the kingdom would only consider cutting oil production if…the US agreed to match those cuts because it wants to protect its market share.” The “US” doesn’t produce oil. Many hundreds of companies in the US produce oil. And it is illegal for those companies to cooperate in any effort to jointly attempt to control rates here.
pappadeux on Wed, 10th Dec 2014 10:19 pm
Rock, isn’t Texas Railroad commission used to regulate oil production and served as micro-OPEC in early days?
Plantagenet on Wed, 10th Dec 2014 11:34 pm
I submitted this news article….good to see it show up for discussion.
I thought the most important thing in it was Prince Turki’s statement “The kingdom is not going to give up market share at this time to anybody and allow – whether it is Russia, Nigeria, or Iran or other places – to sell oil to Saudi customer,”
KSA is determined to undercut the other producers on price to keep their market share….hard to see how this ends without the price dropping farther.
Makati1 on Thu, 11th Dec 2014 1:14 am
I think this will hurt the “uncontrolled” US oil industry more than the Russians, Iranians or other Oil exporters. The US oil industry is built on debt, Mount Everest sized debt. The other national oil companies can rely on their governments to keep them going. Or so it seems to me.
q on Thu, 11th Dec 2014 3:44 am
!The US oil industry is built on debt, Mount Everest sized debt.”
USA will create just more debt, bail out oil industry and be happy again. 😀
Makati1 on Thu, 11th Dec 2014 5:13 am
q on Thu, sadly, you are probably correct. Sooner or later though, the debt machine will explode and the US and the West, will be 3rd world openly.
Dredd on Thu, 11th Dec 2014 5:18 am
If the price of oil is the trophy KSA is winning, assuming that they have a production cost meaningfully lower than the market sales price.
On the other hand, if there are no real winners, then it is gang warfare.
The common good either for themselves (Oil-Qaeda) or the public consumers (citizens of industrial civilization), has not shown up in their thinking lately.
Davy on Thu, 11th Dec 2014 7:47 am
OH, Mak, take off the rose colored glasses and look at what is happening to your super hero Russia now. There is real pain and panic in Russia. This is a dangerous situation for all of us. I am not crowing about this. The west is going to pay a steep price for this insane fight with Russia. I tire of your propaganda distortions pointing fingers at your hated west nemesis and talking up your sick super heroes.
Are you nervous or something. You can’t live with the fact the world is so interconnected because this means your super heroes can’t win and the west lose instead both lose. It is confounding your fantasy with reality why there is no decouple of the two. You read excessive amounts of propaganda to fuel your propaganda instead of relying on sound economic understanding of the dangers to the whole system of market contagions from any TBTF sector. Russia, US shale bubble, and other national oil exporters are TBTF systematically.
Mak, I have been watching your propaganda closely and I watch how your propaganda is failing to lift off. Instead your super heroes are dropping like flies. The west is dropping like flies too but your super heroes were not supposed to drop per you and the other propaganda bitches on this board. These super heroes were supposed to achieve break out and bury the west.
rockman on Thu, 11th Dec 2014 8:02 am
pappy – The TRRC wasn’t a “micro-OPEC”. At one time they were the Mother of All Oil cartels and could beat you to death with their big regulatory stick if they so chose. LOL. A lot of folks don’t realize that a good while back the US (actually Texas) was the biggest exporter of oil on the planet. And the TRRC used its power of proration to limit oil production in an effort to keep prices stable. Each month the commissioners would meet and set the “allowable rate”: how much oil each well could produce of it nominal rate. And that nominal rate was also set by the TRRC for each well. So your well might have a rate of 300 bopd and the allowable is 100% so you produce 300 bopd. But prices start sliding and next month the TRRC sets the allowable at 80% so you choke your well back and only produce 240 bopd that next month.
And unlike OPEC cheaters you didn’t break the rules for fear of losing your right to operate in Texas, lose your well and possible end up in state prison. And what will surprise some folks is that the TRRC still has that same authority. They still set the allowable every month. Since the early 70’s the allowable has always been set at 100%. For whatever reason the TRRC could force all wells in Texas to cut their production next month. And in the unlikely event that would happen a big battle with the feds would certainly erupt.
Kenz300 on Thu, 11th Dec 2014 8:34 am
The projected increase in US production is already being adjusted down……..
Risky and expensive plays are being reevaluated and many put on hold……. Over leveraged companies are pulling back….. and reducing expenditures……
The US will reduce expected production because investors will decide that oil at $60 or less makes plays that were originally evaluated for $90 or more unprofitable………….
KSA will reduce production……. when increasing oil production in the US slows and Russia and Iran agree to cut production……
Until then….. enjoy the lower oil prices while they last…..
Apneaman on Thu, 11th Dec 2014 8:53 am
Here is the one reason NOT to read the telegraph or any of it’s sister publications. The owners; elites making money propagandizing for their self interests and the interests of their advertisers (more elites). All MSM is corporate/elite owned.
David and Frederick Barclay
http://en.wikipedia.org/wiki/David_and_Frederick_Barclay
JuanP on Thu, 11th Dec 2014 11:06 am
Rockman, your contributions are enriching and fascinating. Thanks! Keep up the good work.
Makati1 on Thu, 11th Dec 2014 6:28 pm
Apneaman, I take what I read in ANY news site with a grain of salt and always consider the source. ALL major media are owned by the elite. ALL of them. And they all pretty much tell the same twisted tales. You only get a different version if you go to a news site in one of the “bad” countries today. Or one of the more neutral countries. At least that is my experience.
GregT on Thu, 11th Dec 2014 8:20 pm
rock,
So the KSA refused to cut production. Now all producers make less profits, and some must walk away. If it is true, that the so called ‘glut’ amounted to 700,000 bbls per day, and the US fracking industry has so much to lose, why didn’t the US frackers cut production? Instead of being forced to go under?
Kenz300 on Sat, 13th Dec 2014 10:01 am
High cost producers will cut production……. they will be broke…..