Arab Today, arab today saudi achieves 100 a barrel oil target
Last Updated : GMT 12:18:08
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Saudi achieves $100 a barrel oil target

Arab Today, arab today

Arab Today, arab today Saudi achieves $100 a barrel oil target

Riyadh - Arabstoday

Saudi Arabia The country is poised to rein in oil sales after it achieved a $100-a-barrel (Dh367.32) target by cutting the price of its crude and pumping at the highest rate in at least three decades. The world’s biggest crude exporter started to scale back shipments this month, Vienna-based researcher JBC Energy GmbH said, citing tanker fixtures. Three days ago the desert kingdom raised the July official selling price to Asia of its main crude grade, Arab Light, for the first time in three months, another sign that it is reducing production, according to the Centre for Global Energy Studies in London. Saudi Arabia has been trying to lower the international price of oil to about $100 as slowing global economic growth counters concern of a supply shortage following a ban by western nations on imports from Iran. Brent crude, used to price more than half the world’s oil, fell to a low of $95.63 a barrel on June 4 amid Europe’s debt crisis, brimming supplies and weaker-than-expected Chinese manufacturing. Prices were as high as $128.40 in March. “The downward pressure on prices will continue until they reduce supply,” said Manouchehr Takin, an analyst at CGES, which predicted last month that the Saudis would attain their $100 target. “OPEC’s doves have said $100 is their target, so they have to defend it.” The kingdom has been pumping more than 9.5 million barrels a day since June 2011, the longest stretch for at least 11 years, according to data from the US Energy Department. Output has averaged 10 million barrels a day for the past three months, Oil Minister Ali Al Naimi said. That\'s the highest level since at least 1980, according to US government data. Brent should drop to $100 as supply outweighs demand, Al Naimi said on May 13 in Adelaide, Australia, when prices were near $112. Brent closed at $98.84 a barrel on the London-based ICE Futures Europe exchange on June 5. The price of OPEC’s basket of crudes dropped below $100 a barrel on June 4 after more than seven months, ending the longest run in triple digits amid weaker growth. Saudi Arabia raised the premium for Arab Light to $1.35 a barrel over benchmark prices for July delivery. That marks the biggest price cut in the first half of the year the kingdom has made since Bloomberg began compiling the data in 2000. Demand for Saudi crude would drop to 9.5 million barrels a day in the second half, about 500,000 barrels less than what the kingdom produced last month, according to JBC Energy. To balance the oil market, members of the Organisation of Petroleum Exporting Countries should cut output, which is at “elevated” levels near 32 million barrels a day, by 1.15 million barrels, Morgan Stanley forecast yesterday. “We think the Saudis have started to cut back already,” David Wech, managing director at JBC, said by phone yesterday. “The economy is struggling, demand is relatively weak, stock builds have taken place in the US, China, and by the Saudis themselves. All these factors point to a drop in production.” OPEC agreed in December to an official production ceiling of 30 million barrel-a-day for all 12 of its members, without specifying individual national quotas. The group meets again on June 14 in Vienna. Barclays Plc, Societe Generale SA and the CGES predict that OPEC will keep its formal output quota unchanged next week. OPEC will maintain supply as they’d be “unwilling to do anything that might risk prematurely tightening markets once again at a time of such economic uncertainty”, International Energy Agency Executive Director Maria van der Hoeven said in a June 5 interview in Kuala Lumpur. Europe’s debt crisis, now in its third year, has crimped exports from China, whose manufacturing sector in May grew at the weakest pace since December, according to the country’s Purchasing Managers’ Index. A separate gauge from HSBC Holdings Plc and Markit Economics showed a seventh straight contraction, the longest since the 2008 global financial crisis. European Union governments will go ahead with a ban on Iranian oil imports from July 1 even though some “progress” was made in nuclear talks between major world powers and officials from the Islamic republic, the EU said May 25. Crude exports from Iran were about 300,000 barrels a day lower in the first three months of the year, compared to the last quarter in 2011, according to the Paris-based IEA. OPEC, responsible for about 40 per cent of global output, bolstered production by 410,000 barrels a day to 31.85 million barrels in April, IEA data show. That leaves the group’s output at about 2.3 million more than is needed in the second quarter and 6 percent above its quota. Saudi Arabia’s oil storage tanks at home and overseas are full, al-Naimi said in March. China increased its imports in the first quarter to fill stockpiles and not because of growth in domestic demand, China National Petroleum Corp. said May 4 in its online newsletter. US crude inventories rose to 385 million barrels in the week ended May 25, the highest in 22 years, Energy Department data show. “The Saudis had ramped up production because they were very worried about the potential for demand destruction from high prices,” said Roy Jordan, a London-based oil analyst at Facts Global Energy. “If prices fall more precipitously, we would expect Saudi to cut back.” From: Gulfnews

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