Monday, June 16, 2008

Saudi Arabia to increase oil production: but by how much?

Firstly the recent increase in Saudi production has pushed current production to 9.45 million barrels a day, nearly equal to the level reached a few years ago.

Now the Saudis have moved to further increase their production and call a major meeting of oil producers and consumers later this month. This will of course put downward pressure on prices but the magnitude of the Saudi efforts is presented very differently in major international papers.

According to the New York Times

The increase could bring Saudi output to a production level of 10 million barrels a day, which, if sustained, would be the kingdom’s highest ever.

This would prove wrong my ill-informed predictions about future Saudi production by July. The article emphasizes an ambition to limit volatility in the markets, a marked change from OPECs effort to maintain a definite price band only a few years ago.

The Wall Street Journal's article on the same development is much less upbeat. They suggest a rather smaller increase in production.

U.N. Secretary-General Ban Ki-moon said Sunday after meeting with the country's oil minister that the kingdom will raise production by 200,000 barrels a day in July. It wasn't immediately clear whether that rise would be permanent or a one-off response, as was a Saudi boost of 300,000 barrels a day in June.

While the Financial Times never puts a definite figure on the proposed increase, noting that

The kingdom has dismissed ideas it would boost production all the way to 10m b/d, up from the 9.45m b/d it pumps today, which is already 300,000 b/d higher than last month.

Journalism today!

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