Even if Saudi Arabia wins its struggle with U.S. shale producers over market share, it will face a new billion-barrel adversary.
One day after Saudi Arabia’s oil minister said it was time for high-cost producers to call it quits, two Bakken shale drillers announced they’re doing just that.
The world’s most powerful oilman brought a harsh message to Houston for executives hoping for a rescue from low prices: high-cost producers - many of them sitting in the room - need to either “lower costs, borrow cash or liquidate."
Saudi Arabia said its accord with Russia to cap oil production was “the beginning of a process,” but the path from a freeze to the output cuts needed to eliminate a global surplus is far from clear.
Iran has snubbed a proposal agreed to by four oil powerhouses to cap their crude output if other producers do the same, with a senior official saying Tehran has no intention of freezing production levels.
Russia has agreed with Opec members Saudi Arabia, Qatar and Venezuela to freeze oil production levels if other producers do the same.
Saudi Arabia’s oil minister plans to meet with his Russian counterpart in Doha on Tuesday to discuss the oil market, according to a person familiar with the talks. Ali al-Naimi, the most senior oil official of the world’s biggest crude exporter, will speak with Russia’s Alexander Novak in the Qatari capital, according to the person, who asked not to be identified because the talks are private.
With oil trading near $30 a barrel, calls for orchestrated output cuts to quell global oversupply have intensified this week. Trouble is, none of the world’s largest producers, most notably Russia and Saudi Arabia, have shown they’re ready to make a move.
The world’s biggest oil producer is spending as much now as it did before the crash in crude prices, signaling no surrender in Saudi Arabia’s battle with rivals.
Oil dropped after Saudi Arabia, the world’s biggest crude exporter, said low prices won’t reduce its spending on energy projects and China’s diesel consumption dropped for a fourth consecutive month. Futures dropped as much as 4.6 percent in New York. Saudi Arabian Oil Co., also known as Saudi Aramco, is maintaining its investment plans despite the rout in the crude market, Chairman Khalid Al-Falih said Monday. Diesel use in China dropped 5.6 percent in December compared with a year earlier and gasoline consumption grew at the slowest pace in more than two years.
OPEC’s production in the month of December fell by 130,000 barrels per day, according to the latest Platts survey.
Iran’s Supreme Leader Ayatollah Ali Khamenei said a mob attack on the Saudi embassy in Tehran earlier had “hurt” the Islamic Republic, in a speech that also praised officials who secured the lifting of sanctions over the weekend. Saudi Arabia cut diplomatic and commercial ties with Iran after protesters stormed the mission in response to the execution by Saudi authorities of a prominent Shiite cleric on Jan. 2, deepening tensions between two powers on opposing sides in many of the region’s conflicts.
Saudi Arabia’s economy is set to grow this year at the slowest pace since 2002 as the oil-price plunge drains the kingdom’s finances, according to projections released by the International Monetary Fund and HSBC.
Chinese President Xi Jinping is set to visit Saudi Arabia, Egypt and Iran later this month.
OPEC will soon make efforts to convene before the next scheduled meeting in June as the slump in oil prices is hurting producers, including the world’s biggest exporter, Saudi Arabia, said Emmanuel Kachikwu, Nigeria’s minister of state for petroleum resources.
A leading oil and gas expert said an Initial Public Offering (IPO) by Saudi Aramco could potentially be the largest on record.
Saudi Arabia, one of the most tradition- bound societies on the planet, where family structure and tribal patriarchy differ little from a century ago, is suddenly in a hurry. It has done more in the past week than in most years. Over eight days, it has executed dozens of militants, severed ties with Iran and announced numerous steps for a radical rollback of the state that may include privatizing oil giant Saudi Aramco, among the world’s largest companies.
Saudi Arabia is said to be reviewing an IPO (Initial Public offering) with a decision expected to take place in the coming months.
The ramping up of tension between Saudi Arabia and Iran makes it highly unlikely Saudi Arabia will cut its output to help Iran regain market share, according to Wood Mackenzie.
Iraq has offered to act as a mediator to ease tensions between Saudi Arabia and Iran that escalated after the kingdom’s execution of a Shiite cleric and attacks on two of Saudi diplomatic posts in the Islamic Republic. Some Sunni Arab nations have followed the Saudis’ lead and severed or downgraded ties with Iran, while others have offered words of caution aimed at calming the situation. The offer by Iraqi foreign minister Ibrahim al-Jaafari, made during a news conference in the Iranian capital, included the diplomat referring to the execution of Sheikh Nimr al-Nimr as a “crime”, a description that raised questions as to whether Saudi officials would even consider such an offer. The kingdom and its allies say that Mr al-Nimr was executed after being tried and sentenced to death under Saudi law.
Armed men set a Saudi Aramco bus, carrying employees, on fire in Saudi Arabia amid heightened tensions.
At almost any other time, an escalating diplomatic conflict between OPEC members Iran and Saudi Arabia would mean a spike in oil prices.
Developing political tensions between Iran and Saudi Arabia have resulted in fluctuating oil prices, with the price of Brent crude having risen to $38.50/bbl, its highest level for three weeks.
There are several reasons why escalating tensions between Iran and Saudi Arabia make markets nervous. One of them is that they sit on either side of the Persian Gulf, the world’s biggest concentration of oil tankers.
Oil gained for a second day as Saudi Arabia cut ties with Iran a day after its embassy in Tehran was attacked to protest the Saudis’ execution of a prominent Shiite cleric.