Exclusive: Cost of pump-at-will oil policy spurred Saudi OPEC U-turn
- Sources say the kingdom may have stretched its current limits by extracting a record of around 10.7 million bpd this year, which could be one reason why Riyadh pushed so hard for a global deal to cut production.Riyadh, the world's top oil exporter, felt the burn of cheap oil this year when crude was trading below $50 a barrel, as the reality of its costly war in Yemen and the task of shaking up its economy to create thousands of jobs began to sink in.With tight resources, Saudi Arabia found itself weighing the prospect of investing billions of dollars to raise oil output further if it wanted to gain more market share under a strategy adopted in 2014.
- On Thursday, oil LCOc1 was trading above $54 a barrel.Under the deal, Saudi Arabia, de facto leader of the Organization of the Petroleum Exporting Countries, will from January cut output to around 10 million bpd - well below the 12 million bpd that the state has affirmed it can produce.Saudi-based industry sources and market insiders say the kingdom cannot sustain historically high output for long.
- Saudi oil officials have said they can produce up to 12 million or even 12.5 million bpd if needed, particularly in the event of a sudden, global supply disruption.Some say it is not a question of whether Saudi can do it, it is a matter of how soon.Former oil minister Ali al-Naimi had said that to reach 12 million, Saudi Aramco would need 90 days to move rigs from exploration work to drill new wells and raise production.Saudi Arabia has been working for most of this year towards boosting prices, rather than leaving that job to market forces, a shift from the strategy it had championed since November 2014.
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