Saudi Arabia keeps oil tap on; Iran, Russia hurt
Saudi Arabia shows no sign of changing policy of high oil output that drives prices down, hurts Moscow and Tehran
Saudi Arabia is showing no sign of changing its policy of high oil output to support global economic growth, despite a fall in crude prices this week below $90 a barrel for the first time in 18 months.
Gulf and Western government sources in contact with Saudi officials said the OPEC power can tolerate oil at $90 or below for months, price levels that hurt Iran and Russia as they face off against Riyadh over the conflict in Syria.
Saudi Arabia has a built up a revenue surplus in the first half of the year and requires a much lower oil price to balance its budget than most of its fellow OPEC members and leading non-OPEC producer Russia.
“If we keep producing at roughly the same rate, we’re not flooding the market,” said a senior oil official from a Gulf producer. “And we want to act responsibly for the sake of the world economy.”
Strong supporters of fellow Sunni Syrian rebels seeking to oust Syrian President Bashar al-Assad, Saudi leaders have criticized Russia for defending him.
With Iran, Russia is Syria’s main ally, providing most of its arms. Both Moscow and Tehran need crude at $115 a barrel to meet budget requirements.
Industry sources say Saudi Arabia, the only oil producer with significant spare capacity, looks set to trim output over the next two months, but only because demand from refineries in China and the United States will dip.
“We’re told the Saudis are OK with lower prices, $90 or below, for a few months,” said a Western diplomat. “Even if they have to trim back because of lower demand they don’t give us the impression they’ll be bailing out OPEC on price any time soon,” he said.
Crude is down from a March peak of $128 partly because the economic outlook has darkened but also because Saudi Arabia, pressed by major consumer countries, opened the taps in March to a 30-year high of 10 million bpd.
That has made up for a slump in output from Iran because of sanctions, not only drawing criticism from Tehran but others in the Organization of the Petroleum Exporting Countries who prefer higher prices including Algeria, Iraq and Venezuela.Explore posts in the same categories: Uncategorized