"Financial Times runs a piece noting that oil from Saudi Arabia will continue to play an important role in the global economy despite enormous potential from shale oils now beginning to be exploited in North America and other parts of the world. The reason is that Saudi Arabia, which still holds and will continue to hold a substantial portion of the world’s oil supply, has served as a buffer and will continue to do so.
Saudi Arabia has shown its willingness to step in and increase its production when global political affairs end up with reduced production elsewhere. The Saudis, for example, increased production when Libya went off-line during its recent revolution. The Kingdom also increase its shipping to fill the void created by sanctions on Iranian oil. It has the reserves that allow it to do so, even if not perfectly.
The article also notes how Saudi Arabia sells oil on contract to end-users; it keeps its oil out of the spot market. This results in a moderating of prices and prevents speculators from gaming the market even more than they currently do."
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