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Saudia Arabia set to pump maximum crude, analysts predict

Jun. 19, 2015 6:35 PM ETUCO, USO, OIL-OLD, DBO, TWTI, USL, DTO, OLO-OLD, SCO, DNO, BNO, UWTI, DWTI, SZOXF, OILBy: Carl Surran, SA News Editor80 Comments
  • The global oil glut is about to get worse, Citigroup and Goldman Sachs say, as Saudi Arabia pushes to produce as much oil as it possibly can.
  • The world’s largest oil exporter already has increased output to a 30-year high of 10.3M bbl/day as it tries to check growth from the U.S. and elsewhere, and it is ready to add even more to protect its market share and having abandoned the role of swing supplier, according to Citi and Goldman.
  • Citi predicts the Saudis will push toward its maximum daily capacity, which the firm estimates at ~11M barrels, in H2 2015.
  • "The clear implication of Saudi Arabia’s new oil policy of pressuring high-cost producers is for them to increase production and exports,” writes Seth Kleinman, Citi's head of energy strategy. “With an increasingly compelling picture of lower oil prices over the next 10-20 years, it makes sense for Saudi to use it all and use it now.”
  • The lower outlook for prices “turns oil in the ground in Saudi from an appreciating resource into a depreciating resource," Kleinman adds. “If it’s depreciating, you produce it all as fast as you can.”
  • ETFs: USO, OIL, UCO, UWTI, SCO, BNO, DBO, DWTI, DTO, USL, DNO, OLO, SZO, TWTI, OLEM

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