Saudi Arabia apparently intends to increase oil production – Commerzbank – Crypto News – Crypto News
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Saudi Arabia apparently intends to increase oil production – Commerzbank – Crypto News

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9 months ago

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As reported by the Financial Times, citing sources with knowledge of the matter, Saudi Arabia intends to abandon its unofficial price target of $100 per barrel allowing it to increase oil production. There is no officially announced price target, Commerzbank commodity analyst Carsten Fritsch notes.

Gradual withdrawal of the voluntary production cuts seems likely

“According to IMF calculations, Saudi Arabia needs an oil price of almost $100 to balance the national budget. Due to the production cuts and the resulting reduction in export volumes, the required price had continued to rise. Saudi Arabia is no longer willing to give up market share to other producers and also has sufficient alternative financing options to weather a period of lower oil prices. Thus, a gradual withdrawal of the voluntary production cuts from the beginning of December seems likely.”

“Two OPEC+ sources said yesterday that the planned production increase would go ahead. For Saudi Arabia, we are talking about 1 million barrels per day; for OPEC+ as a whole, 2.2 million barrels per day. Since some countries, such as Iraq and Kazakhstan, have not cut their production as agreed, the actual production increase is likely to be closer to 1.6-1.7 million barrels per day.”

“If this amount does indeed come onto the market gradually from December, the oil market will potentially face a considerable oversupply in the coming year. The oil price would react to this with a further price drop. There would then be downside risks to our oil price forecast of USD 80 next year.”

 

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