I doubt anyone really knows how accurate data regarding Saudi Arabian production is, but if this is accurate, this is astonishing. As a rule of thumb, Saudi Arabian crude oil production is around 11 million bopd. In my mind, it's noteworthy if Saudi Arabian production drops to 10 million bopd. But look at this:
In addition, Saudi Arabian production should increase int he summer pushed by domestic demand: Saudi uses crude oil to generate electricity for its air conditioning demands.
We should be getting Saudi Arbian-US import data for April, 2019, any day now.
Link here.
They're sitting on a lake of oil. They have done 11+ recently and probably can go to 12, rather easily, rather quickly. With effort, they could do 20+. They have individual wells that do 100,000 bopd. (not the average, but they have some like that.)
ReplyDeleteThe drop into the 9s is all about trying to prop price up. Darned frackers keep growing production and hurting price.
SA drops their production to prop the price up. Of course they would prefer to have the volume also. But if it is a choice between 9 MM bopd at $60 or 11 MM bopd at $30, that is a no-brainer for them.
Of course they keep their eye on things. Don't want a repeat of 1986, where they defended price while dropping volume from 8 MM bopd down to 3! But so far, doesn't seem like that is the issue for them yet. It's not like they are trying to defend $100 oil for one thing. Just $60 Brent.
Feridoun Fesharaki suspects they have a line in the sand at 9 MM bopd (after that they'll let the price go, but defend that amount of production). But, so far doesn't seem like they are really there yet.
All in all, no sign of peak oil.
DeleteNo, no peak oil. Only reason prices are so high is because of Saudis not pumping as much as they could. Oil would be sub-20, if you cut SA into random pieces and had Texans producing it and competing with each other. And they have 50-100 year supply (of ready reserves, not even counting their shale and they got that below).
DeleteSaudis are a little like a country that has diamonds as extremely common. They know if they produced as fast as they could, the price would collapse. So they try to restrict volume and prop price up. Like DeBeers.
The Saudis learned from their "trillion-dollar mistake" in 2014 - 2016 when they maxed production. Saudi is in deep trouble: they used to need $100-oil to balance their budget; then they went to $90, then to $80. They say then can manage with $70 oil (Brent) but they're having trouble even getting that price.
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