Well, it's pretty neck-snapping trying to follow global events at the moment. A couple of days ago, there was an epidemic of whining about how raising Saudi production couldn't help offset Libyan production, and the Saudis hadn't decided what to do. Then, this morning, there are anonymous reports from Saudi insiders that Saudi Arabia has actually already raised production at or above 9mbd:
Saudi Arabia has increased its oil production to more than 9 million barrels per day (bpd) to compensate for disruption to Libyan output, an industry source familiar with the kingdom's production told Reuters on Friday.
"We have started producing over 9 million barrels per day (bpd). We have a lot of production capacity," the source said, but said he could not say when the change had taken place.
Oil prices spiked to a 2-1/2 year peak of nearly $120 a barrel LCOc1 on Thursday, stoked by concern the wave of revolutionary unrest gripping world No.12 oil exporter Libya could spread to big oil producing countries in the Middle East.
A report out of Washington by industry publication Energy Intelligence late on Thursday said Saudi Arabia had made the change quietly to try to avoid stoking regional tensions.
"The Saudi move has not been announced publicly, most likely because of the political sensitivities in the region and the internal dynamics of OPEC," Energy Intelligence wrote.
Who knows if this is true or not? At any rate, the graph above shows what this would look like in the context of recent Saudi production (which was already seeming to creep up in recent months).
In response, Brent prices seem roughly stable this morning.
Why are Saudi oil exports decreasing since 2005 despite of increasing oil price?
ReplyDeleteAlex:
ReplyDeleteThat was the subject of a massive debate on The Oil Drum and Econbrowser at the time. My opinion is the most likely cause is declines in some of the older fields, together with long lack of investment in newer fields, meant that they were unable to sustain 9.5 at that time. Other people thought it was a deliberate move to increase prices.
Jeez:
ReplyDeleteHundreds of thousands of protesters turned out in cities across the Middle East on Friday to protest the unaccountability of their leaders and express solidarity with the uprising in Libya that Col. Muammar el-Qaddafi is trying to suppress with force.
In Iraq, demonstrations for better government services spiraled out of control in many places. Protesters burned buildings and security forces fired on crowds in Baghdad, Mosul, Ramadi and in Salahuddin Province, north of the capital, killing at least four people.
Large-scale demonstrations in Yemen appeared to proceed more peacefully, even festively. More than 100,000 people poured into the streets on Friday, after Yemen’s embattled president pledged on Wednesday not to crack down on protesters.
In Egypt, tens of thousands of people returned to Tahrir Square in central Cairo to celebrate one full month since the start of the popular revolution that toppled President Hosni Mubarak.
In Bahrain, pro-democracy demonstrations on a scale that appeared to dwarf the largest ever seen in the tiny Persian Gulf nation blocked miles of downtown roads and highways in Manama, the capital, on Friday. The crowds overflowed from Pearl Square in the center of the city for the second time in a week.
It seems like all America's foreign policy sins, of omission as well as commission, are catching up with it at once.
Too big an increase to be coming from anywhere but tank farms, fixed or floating. How is it leaving? No way tankers positioned there rapidly enough.
ReplyDeleteOne of the things that's a little strange is the source couldn't say when the increase occurred - how informed can he really be, in that case? However, *if* the source is correct, and *if* the increase is in the last couple of days, I imagine the Saudi's have plenty of storage at their oil terminals to hold an extra <10% of production for a matter of days. It would be very strange if they didn't (since they've been producing less than the historical high volume, and spreads are low, suggesting they haven't been having any trouble selling what they produce).
ReplyDeleteApparently, the IEA believes the reports of increased production:
ReplyDeleteThe IEA, which oversees energy policy for western countries, held a board meeting in Paris on Friday. A spokesman confirmed the report that Saudi Arabia had increased production, saying there was “every indication that increased volumes are now being made available to the market”.
When reports of increased production are left to an anonymous source inside Saudi Arabia, we must surely know we are in trouble, lol!
ReplyDeleteFT link about IEA is behind a paywall, try FT.com / Global Economy - Saudis lift oil output to fill Libya shortfall. al-Naimi says they "will meet any shortage." Bets?
ReplyDeleteGas prices: 'Most expensive February ever' (CNN). Today's gain was largest since 2008.
And speaking of sins and the price of gasoline, just imagine this coming to pass:
ReplyDeleteA group of Saudi youth Thursday called for a peaceful demonstration in the coastal city of Jeddah in solidarity with anti-government protesters in Libya.
In a printed statement distributed around Riyadh, a group calling itself Jeddah Youth for Change asked people to demonstrate near the al-Beia roundabout in Jeddah on Friday.
'We will not give up our right to peacefully demonstrate,' the announcement read.
'We will express our solidarity with the Libyan people who are living the hardship of their revolt against the oppressive and unjust system of Moamer Gaddafi,' the flier said.
Protests in the oil-rich Saudi kingdom are rare. Source
This wave of unrest in MENA is truly Hegelian.
ReplyDeleteA couple of months back I had a chance to meet up with a business acquaintance who had spent 9 years in KSA working for the royal family. Some things he said:
a) He felt he didn't understand them as people even after a decade. At the end of his time, he was still occasionally blown away by things he saw. Didn't get much detail from him unfortunately.
b) Saudi loyalties are still fundamentally tribal. They appear to be friendly to outsiders/westerners but a closer connection is unlikely. The way he put it was: a Saudi is never really your friend because he doesn't have to be.... he has his tribe. The flip side is that if he gets a bad reputation with his tribe, he really is toast. He becomes an outcast.
c)When it came to oil, the Saudis are just behaving in their economic best interests. Charge maximum price without screwing up the world economy. The nature of his association with the royals wasn't particularly likely to give him inside information, though.
But to connect that conversation with Hegel, I do think my acquaintance was a bit star struck by the Saudi royals. He certainly expected me be. But it was hard to feel it. They are mere mortals like the rest of us. And, given the past month, we know they could in principle be dislodged from power very rapidly. It's not unthinkable. And the aura of power fades a little with that knowledge. A change in consciousness can happen very rapidly and be extremely potent.
The gradual crumbling that left unaltered the face of the whole is cut short by a sunburst which, in one flash, illuminates the features of the new world --- Phenomenology of Spirit
I have no idea what's going to happen but a hell of a lot of Arabs just got schooled as they say.
Benno:
ReplyDeleteYeah, I'm trying to figure out what would make Saudis different than Tunisians/Egyptians/Bahreinis/Libyans, and I don't see any terribly convincing answer. And then it doesn't help that the King is 87 and apparently part-time.
You can read the WaPo trying to reassure itself here. I guess March 11th is the day we'll find out.
I wish I did see a difference, because the shit is really going to hit the fan everywhere if this happens to Saudi Arabia. The riots/protests and dumb Spanish policy choices we are seeing now are as nothing to what we'll see if oil suddenly goes to $200 or $300, which it certainly will if KSA were to go Libyan.
Risa:
ReplyDeleteWell, obviously we don't know yet if this is the start of something huge, or has mostly run it's course. But suppose for the sake of discussion that it was the start of a major disaster (which I agree can't be completely ruled out). It would really look nothing like John's theory of Catabolic Collapse - a) it's not slow at all, and b) it has nothing to do with lack of enough economic production to maintain societies capital. Instead, it has to do with very high rates of economic production creating commodity price inflation, stressing poor people in developing countries, combined with technological shifts in information sharing (cellphones, Facebook, Twittter, etc) making a large number of autocracies unstable at the same time, so that contagious revolutions become possible.
I can't think of anyone who predicted this particular scenario in broad outlines - someone correct me if I'm wrong. I think those of us worrying about food/oil shocks/middle east were closer than most, but I certainly wouldn't claim to have nailed it in advance.
This NPR piece has a somewhat more plausible theory for why KSA will not go the same way: the king is personally popular and seen as a reformer.
ReplyDelete