The Saudi Target Price Band For Brent Crude - Is It About To Break? - Seeking Alpha

The Saudi Target Price Band For Brent Crude - Is It About To Break? - Seeking Alpha:

"If you look at the movement of Brent Crude oil and Saudi Aramco production statistics over the past two years, you see an interesting pattern. If the price gets at or close to $125 per barrel Saudi production picks up. If the price drops to or close to $100 per barrel, Saudi production is ratcheted back.

In the period between 1986 and 2002, the Saudi oil ministers managed (with their sometimes-compliant OPEC member states partial assistance) to maintain oil in a range somewhere between 25 and 30 dollars. The official "price band" was said to be between 26 and 28 dollars per barrel. While there were occasional breaches of the price band, the Saudis were pretty good at keeping the price at the desired level, a level which seems low by today's standards but seemed awfully high compared to the $2 per barrel level of the 1950's and 1960's.

Now, virtually everyone these days agrees that to the extent there might still exist spare production capacity in the oil producing world, that capacity can be found in the Persian Gulf and specifically, the Kingdom of Saudi Arabia."

'via Blog this'