Saudi Arabia, the world’s biggest oil exporter, is burning close to 750,000 barrels per day (bpd) of its finest quality crude oil to make electricity for its own domestic market.
The image is arresting. Quite simply, Saudi Arabia is producing more of its most valuable export commodity than it can sell.
The kingdom’s crude output has been rising of late. It is still pumping less crude than a year ago, but not due to dwindling oil reserves or difficulties in maintaining output from ageing fields, as “peak oil” theorists had earlier predicted. In fact, the national petroleum company, Saudi Aramco, has just completed the biggest oil development programme in its history, which has had the effect of more than doubling Saudi spare production capacity to about 4 million bpd.
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