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Monday, 28 November 2016

The Saudis are playing with fire if they raise oil output further

The Saudis are playing with fire if they raise oil output further:
"Does Saudi Arabia in its pursuit of a secure share of the world oil market have the nerve to take on its principal supporter and patron? Will those in power in Riyadh take the risk of challenging US economic interests as a new president comes into power in Washington?

The Opec states meet on Wednesday to discuss a co-ordinated cut in production designed to rebalance an oversupplied market. In advance of that meeting, the gamesmanship goes on. The Saudis are producing at record levels while Iran continues to increase output — opening three new fields in the past few weeks alone. There is little sign that the promised cuts will be delivered when the cartel meets and, unsurprisingly, prices have fallen back to around $45 a barrel.

The Saudi response to this stalemate has been to threaten a further increase in production to 11mbd or more. The assumption is that other producers can be pressured into cutting back to give the Saudis a bigger market share. That starts with Iran but extends to the US. In the new world order after the US presidential election the approach looks risky at best and potentially an act of serious self-harm."

'via Blog this'