BP: Saudi Arabia May be Holding Back Production
Saudi Arabia contributes near 13% of the world’s oil supply and is also a member of the cartel known as OPEC. The nation was the world’s number one oil producer until it was passed by the United States within the last few yeas.
Saudi oil reserves and actual production quotas are surrounded in mystery. When the nation makes a public claim to cutting production, the price of oil goes up. The reverse happens as well. That is a powerful position. Determining where Saudi Arabia will set production is a challenge, and analysts get paid good money to figure it out. Understanding Saudi Arabia is key to understanding the oil price.
“I think Saudi Arabia does have capacity that can bring to the market,” BP’s chief executive Bob Dudley told CNBC on Wednesday on the sidelines of the Oil & Money Conference in London.
“But on the other side of it you have very unpredictable circumstances in Venezuela and of course, with the Iran sanctions,” Dudley noted, commenting on the current market forces driving the oil prices
Saudi recently suggested it will push near record production into the market, 2016 having added 10.72 million bpd and now 2018 will add 10.7 million bpd. This will likely take down the current $80 oil price to the detriment of American oil companies. Lower prices of course will be welcome at the pump for the consumer.