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Saudi Arabia Preparing To Fuel Its $100 Billion Oil War With Debt

Saudi Arabia has probably spent around $100 billion of its foreign reserves by now to prosecute its war against American shale and other low-cost oil producers. The oil kingdom’s decision one year ago not to cut production to support oil prices has driven the price of both Brent crude and West Texas Intermediate down below $50 a barrel, but Saudi Arabia will have to spend a lot more to win the battle. Now, there are signs that Saudi Arabia is preparing to double down on its strategy with debt. The Financial Times reports that Saudi Arabia is getting ready to borrow funds in the international bond market to further finance its big effort to protect its market share in the oil world and make life impossible for U.S. shale. Saudi Arabia needs the money to keep its expensive social contract going in the face of rising budget deficits that […]

Posted On : Published By : Tom Whipple
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Saudi Arabia sees robust oil fundamentals as rival output falls

An oil tank is seen at the Saudi Aramco headquarters during a media tour at Damam city November 11, 2007. Long-term oil market fundamentals remain robust but prolonged low prices could threaten security of supply and pave the way for a price spike, Saudi Arabia’s vice oil minister said on Monday. The world’s largest crude exporter will continue investing in its oil and gas sector, Prince Abdulaziz bin Salman said in a speech at an Asian energy conference in the Qatari capital Doha. "Supply and demand patterns indicate that the long-term fundamentals of the oil complex remain robust," he said. The comments suggest OPEC heavyweight Saudi Arabia is satisfied with its strategy of not cutting production and allowing low prices to reduce supplies, without losing market share to competitors. Oil prices, at around $47 a barrel, have more than halved since July 2014 on ample supplies. The Organization of […]

Posted On : Published By : Tom Whipple
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Chevron Plans Close to 1,000 Layoffs of Saudi Staff in Kuwait Oil Spat

DUBAI— Chevron Corp. CVX -1.82 % is planning to lay off up to 1,000 employees working in the neutral zone between Saudi Arabia and Kuwait, as a dispute between those countries has halted all work on oil fields for several months, according to people familiar with the matter. Chevron has already significantly reduced the number of petroleum-development rigs in the neutral zone, a 2,230-square-mile oil-rich area that the countries jointly oversee. One of the people said the layoffs of Saudi Arabian staff had begun. “There is no point of keeping staff if the fields have been shut down for months,” the person said. A Chevron spokeswoman said she couldn’t “discuss specific details of our employees and contractors.” “Current difficulties in securing work permits and materials have impacted the company’s operations,” she said, forcing its local unit Saudi Arabian Chevron and Kuwait Gulf Oil Co. to stop onshore production in […]

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Saudi Arabia to tap global bond markets as oil fall hits finances

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Saudi Arabia will not stop pumping

Saudi Arabia is determined to stick to its policy of pumping enough oil to protect its global market share, despite the financial pain inflicted on the kingdom’s economy. Officials have told the Financial Times that the world’s largest exporter will produce enough oil to meet customer demand, indicating that the kingdom is in no mood to change tack ahead of the December 4 meeting in Vienna of the producers’ cartel Opec. “The only thing to do now is to let the market do its job,” said Khalid al-Falih, chairman of the state-owned Saudi Arabian Oil Company (Saudi Aramco). “There have been no conversations here that say we should cut production now that we’ve seen the pain.” Saudi Arabia rocked oil markets last November when Opec decided against production cuts, making clear that the kingdom was abandoning its policy of reducing supplies to stabilise the price. Since then, the oil […]

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Saudi Vice Oil Minister Sees Price Surge After Cutbacks

The scale of the global oil and gas industry’s spending cuts are making another surge in energy prices possible by diminishing future supply, Saudi Vice Minister of Petroleum & Mineral Resources Prince Abdulaziz bin Salman said. Investments have been cut by $200 billion this year and will drop another 3 percent to 8 percent next year, marking the first time since the mid 1980s that industry cut the spending for two consecutive years, Prince Abdulaziz said in a copy of his speech for delivery to energy ministers in Doha Monday. Nearly 5 million barrels a day of projects have been deferred or canceled, he said in the remarks. Just like high oil prices can’t last, a prolonged period of low prices is “also unsustainable, as it will induce large investment cuts and reduce the resilience of the oil industry, undermining the future security of supply and setting the scene […]

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Saudi Minister Says Asia Will Drive Oil Demand

Oil demand will soon reflect the “attractiveness” of the current level of crude prices, and Asia will be a vital engine of economic expansion for decades, Saudi Oil Minister Ali al-Naimi said. OPEC’s chief joined him in seeing Asia as the main hub for growth. Oil demand in Asia will rise by about 16 million barrels a day to almost 46 million by 2040, Abdalla Salem El-Badri , secretary-general of the Organization of Petroleum Exporting Countries, said in an article posted on the International Energy Forum’s website. The region will need to import 40 million barrels a day of crude oil and refined products by then, he said. Many Asian countries welcome the recent decline in oil, and demand “will soon reflect the attractiveness of the current prices,” al-Naimi said in an a separate article posted on the IEF’s website. “That said, it is not high prices or low […]

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OPEC, Russia oil battle heats up as Sweden buys Saudi crude

The logo of the Organization of the Petroleum Exporting Countries (OPEC) is pictured at its headquarters in Vienna, Austria, August 21, 2015. The Saudi-Russian battle for Europe’s crude oil buyers intensified this week as Swedish refiner Preem bought its first cargo of Saudi Arabian crude oil in around two decades, trading sources said. The purchase from another traditional buyer of Russia’s Urals crude will heat up the contest for market share that Saudi Arabia has effectively brought to Russia’s backyard in the Baltic region. Already, Poland’s two refineries, PKN Orlen and Lotos, have turned to Saudi crude at the expense of Urals. The deputy head of Lotos earlier this week told Reuters that the purchase "made our negotiation position much stronger" with its traditional supplier, Russia. State oil company Saudi Aramco on Thursday also dropped its official selling prices for crude oil to northwest Europe. Preem, which also predominately […]

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Saudi Arabia Doesn’t Need to Cut Energy-Subsidy, Says Oil Minister

RIYADH—Saudi Arabia doesn’t need to reduce its substantial domestic energy subsidies, oil minister Ali al-Naimi said Wednesday, a week after he said the kingdom was studying such a move . Mr. Naimi said slashing domestic energy assistance is a measure for “when you are in dire need, and fortunately Saudi Arabia isn’t today in such dire need.” He was speaking on the sidelines of an energy conference in Riyadh. Domestic energy subsidies make electricity and motor fuel prices in Saudi Arabia among the lowest in the world, leading to high rates of domestic consumption. Saudi Arabia has been burning a growing amount of its crude oil to create electricity, potentially cutting into its ability to retain its spot as the world’s top exporter. Mr. Naimi said last week that cuts to energy subsidies were under consideration. That review had been previously reported, but wasn’t something Saudi Arabia’s leaders have […]

Posted On : Published By : Tom Whipple