Saudi Arabia must perform a high-stakes tightrope act in the second half of this year: pump just enough extra oil to meet a seasonal rise in demand, but not so much that it calls attention to a thinning cushion of spare capacity.
Following an extraordinary failure of the Organization of the Petroleum Exporting Countries to agree to raise output, the world will now rely on Saudi Arabia to meet a more than 2 million barrels per day (bpd) rise in oil demand between the low-demand second quarter and the peak summer third quarter.
The kingdom has thus far managed to bear the strain of filling a gap left by Libya, but with raging civil war likely to keep Libya's oil wells idle for months longer, the world's top exporter will be put to the test in the next few months.
Oil at the beginning of 2003 was $33/bbl. Since then the oil price has tripled and world population has grown by 600 million.
ReplyDelete