Oil prices up in Asia

Saudi Arabia, Opec’s biggest member, appears determined to see through its plan to eliminate a supply glut by squeezing out competitors like United States shale drillers, even as the resulting price collapse spurs dissent from Venezuela, Algeria and Iran.

The council of ministers … stressed the kingdom’s role in achieving the stability of the oil market and its continuous readiness and efforts to cooperate with all OPEC and non-OPEC countries to maintain the stability of the market and prices.

Although oil prices are at a multi-year low, Saudi Arabia has ramped up production, offering discounts to buyers as it aims to drive up its market share.

Saudi Arabia said Monday that it is prepared to use all measures necessary to ensure a stable oil market. This time around there probably will not be any surprise developments, most analysts foresee a status quo approach on the behalf of OPEC to maintain its strategy of pursuing market share and several OPEC officials have said as much.

In his welcoming remarks, Dr. Al Suwaidi said this year’s conference will examine several pertinent topics, including the reality and future of oil in the GCC countries; the impact of global economic change upon the oil industry; key technological developments; and the impact of geostrategic factors on GCC oil. The chart below illustrates why there is tension within Opec as every producer is selling oil at a loss. “We can not allow that the market continue controlling the price”, Del Pino said.

“I don’t think anything will happen because the Saudis do not want to reduce production”. He said oil could go as low as the “mid-$20s”.

Just 10 years ago, Saudi Arabia was the world’s largest oil producing nation, churning out almost twice as much crude oil as the U.S. But American output has skyrocketed in recent years thanks to the shale revolution, which has completely reshaped the global energy equation.

The main players in the petroleum market must certainly reach an agreement about the levels of production. Still, saddled with an oil-import bill of about US$13 billion (S$18.2 billion) previous year, Indonesia makes an unlikely addition to the exporters’ club.

The reality is – according to OPEC’s former president, Abdullah bin Hamad al-Attiyah, that a change in the group’s production policy is unrealistic unless it is matched by equivalent reductions by countries outside the group such as Russian Federation and Mexico. The oil will be exported from Libya’s Hariga port in the east. Fractured from war and port closures, Libya’s oil exports have plummeted to around 400,000 barrels per day from a pre-war tally of 1.6 mb/d. When asked about the Saudi comments, the minister said, “I don’t believe there is strong intention from some parts of OPEC to stabilize the market”.