Saudi Arabia pumping extra 600,000 bpd oil ..........NEW YORK (September 7) : Oil superpower Saudi Arabia said on Wednesday it had pumped an extra 600,000 barrels per day (bpd) since July to try to restrain rocketing petroleum prices.

..........Speaking to Reuters at a hotel in New York as prices hit yet another decade high, Oil Minister Ali al-Naimi said: "We have increased production 600,000 barrels a day since July." ..........The comments confirm that Saudi Arabia, Opec's leading producer, is making a unilateral effort to ease the highest prices for raw material crude oil since 1990.

..........The minister did not specify exact output by Saudi Arabia, the world's largest oil producer. Under Opec's last agreement in June Riyadh was awarded an output quota of 8.253 million bpd. ..........An extra 600,000 bpd on top of that quota would represent a seven percent increase and put Saudi output at 8.85 million. ..........The Organisation of the Petroleum Exporting Countries meets on Sunday to decide production quotas for the coming winter. ..........But Naimi's comments failed to put much of a dent in bullish sentiment that pushed North Sea Brent crude to a fresh 10-year high of $33.50 a barrel. ..........High fuel costs are worrying industrial powers the United States and the European Union, who are calling for more oil. ..........But Opec states which pump most internationally traded petroleum say tight supplies of refined products like heating oil are keeping prices up rather than any shortage of crude.

..........Naimi reiterated that case to a nervous market on Tuesday. .........."There is absolutely no problem putting additional crude oil into the market," Naimi told reporters at a business gathering. .........."But we must be extremely careful that efficiency is required by people running refineries. Eventually people will realise that the industry is living with less inventories. Eventually a lot of this price is hype," he added.

..........The market is waiting to see what will transpire after Saudi Crown Prince Abdullah meets US President Bill Clinton later on Wednesday to discuss issues that include energy. ..........Opec delegates have said Saudi Arabia wants an output rise bigger than 500,000 bpd when the cartel meets in Vienna on September 10. ..........Saudi's task is complicated by the fact that it is the only cartel member with large spare output capacity, meaning it must pump more than its quota if Opec makes any sizeable output hike. ..........The kingdom has been widely regarded as unwilling to be seen acting alone in response to US political pressure and anxious to have its Opec partners to share the job of managing supply. ..........US pressure for lower prices is growing stronger in a presidential election year where fears abound of winter shortages in the world's biggest heating oil market.

..........For its part, Saudi Arabia is concerned that very high prices may hit oil demand growth and give a boost to rival non-Opec output, leading eventually to reduced Opec market share.-Reuters

http://www.brecorder.com/story/S00DD/SDI07/SDI07212.htm

-- Martin Thompson (mthom1927@aol.com), September 09, 2000

Answers

I find this very interesing. 6000,000 since July? What is going on here.

Sorry for the poor post. It is the format of the web page, not my creaky old fingers.

-- Martin Thompson (mthom1927@aol.com), September 09, 2000.

Simple answer, here, Martin. Excess Saudi capacity is heavy, sour crude, very difficult, and in some cases, impossible to refine. Refiners hate it, and many U.S. refiners--those who did not gear up for the new environment-improvement edicts of the Feds--cannot even refine it. They never bought the needed equipment to do so. Thus, a huge bottleneck will develop.

People are mislead by all this talk of the Saudis simply opening the spigot, letting more oil flow, and, presto, the problem is solved. It will be many, many months before any of this "excess" capacity hits end use in the consumer's hands, and, only a portion of it will EVER hit the consumer's hands.

-- JackW (jpayne@webtv.net), September 10, 2000.