• Feb 25th 2011 at 6:49PM
  • 16
According to the International Energy Agency (IEA), Saudi Arabia has boosted its oil output to compensate for shortages in global crude supply caused by the unrest in Libya. Reports confirm that Saudi officials have met with European refiners to discuss the amount of oil required to fill the shortfall, estimated to be 1.2 million barrels of oil per day. An IEA spokesman released a statement claiming that there's "every indication that increased volumes are now being made available to the market".

Prior to the onset of the Libyan protests, Saudi Arabia claimed it retains sufficient spare oil capacity to crank out four million barrels of crude per day. Not everyone is certain this capacity actually exists, but Ali Naimi, the nation's oil minister, made it known that Saudi Arabia is standing by to use this excess capacity:
We have done this so many times, responding to emerging crises on the side of supply. We have enough credence to tell you that we will meet any shortage. I want this to be transmitted to the markets so people can sleep tonight.
Oil crisis averted... at least for now.

[Source: Financial Times | Image: nestor galina – C.C. License 2.0]

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    • 1 Second Ago
      • 4 Years Ago
      Conspiracy guy says, "Is it really coming from Saudi Arabia?"


      -- conspiracy guy, out.
        • 4 Years Ago
        One might guess that if Iraq and Iran were to come on line, then the status quo (but not growth) could be sustained for another 20 years or so -- possibly giving enough time to let alternative energy sources fill in before the shlt totally hits the fan.

        That would be the purpose.
        • 4 Years Ago
        interesting theory. USA controls Iraq, Iraq has a lot of oil, Iraq is neighbor to Saud and there is a pipeline from Iraq to Riyadh in Saud.
        very elaborate lie and ultimately serves little purpose in the long run. it'll run out at the same time either way and the longer they pretend Saud can continue the harder the crash will be.

        but of course that might be the true purpose.
      • 4 Years Ago
      Saudi Arabia is the "central bank"of oil. The one the world turns to when supply get tight. Only problem: according to Wikileaks Saudi oil productions is about to peak:


      in fact world oil production probably peaked already back in 2006:


      I wouldn't expect those oil prices to come significantly down again any time soon...

        • 4 Years Ago

        Saudi Arabia Warns That Rocketing Domestic Oil Demand Could Slash Its Export Capacity

        - Saudi Arabia is running out of oil and Ghawar field will exhaust itself in the end," says Kryuchenkov. "It has been producing oil since 1948, which is unprecedented for any field and still accounts for around 55–60% of exports. The decline will accelerate from here and I think these are more immediate concerns than its consumption growing. As a rule of thumb in the oil industry, Saudi Arabia is seen as the following: a 5% decline in production and a 2% rise in consumption is approximately 15% decline in net oil exports. However, this is not the case just yet."
        • 4 Years Ago
        I don't think Saudi has peaked . . . they could go higher. But I don't think they want to. They've been a strategic decision to limit their production and save it for later generations. Why is it in their interest for them to pump more oil? So they can get more paper dollars that Bernake just prints up?
        • 4 Years Ago
        The Saudi's may be trying to put a gloss on their falling production by saying that they intended it, but it is a tad suspicious that they have done this at a time of rising oil prices.
        Over 50% of their production is from a really old field, Ghawar, and fields that old are normally in steep decline.
        Here is their actual production, exports and home consumption, which is steeply rising:

        I find it impossible to conclude from this that the rest of the world is going to have other than less and less oil from Saudi, whatever the rhetoric emanating from them.
      • 4 Years Ago
      Despite efforts by insurgents trying to further disrupt the OIl markets, it won't succeed. A sabotage effort that merely removed some 150,000 barrels per day of refined product, cannot affect the rising Iraqi oil production.

      Iraq still has not come back on market with its prewar Oil production. As much as three million barrels per day are not yet back in production, shut in while Iraq contines to renovate its long neglected oil patch, and argues over who gets the oil money. Little effort has yet gone inot tapping the vast oil fields discovered in Sunni lands, during the war.

      Many Cassandras are always looking for the bad news; but the reality is other than fear and speculation, the oil markets are in a glut and oversupply situation, with everyone's storage facilities full to overflowing.
      • 4 Years Ago
      Did anyone else notice that some morons broke into one of the Iraq refineries today and killed two guards and set it on fire with bombs??? Another 155,000 b/d gone for at least a while! Who makes up for that now?

      This ride is just starting kids, hang on cause shit gets bumpy from here. Enjoy.
      • 4 Years Ago
      Saudi have said they will increase supply by around 700,000 b/d.
      If they have so much spare capacity laying around, why didn't they simply increase it by 1,200,000 b/d, and fully cover the shortfall?
      Answers on a postcard.
        • 4 Years Ago
        When will the post card get here David? I will be waiting with great anticipation. : )

        Wow, it seem the Saudis really do have control of everything. Until they don't that is. We can all go back to sleep, I, er mean, sleep easy now. Thank you great King, thank you. Many of us will be able to feed our children thanks to your magnificent benevolance, may Ala be with you.
      • 4 Years Ago
      Hardly anyone believes 4m per day spare capacity. I'd say they have a little over half that amount . . . and much of it would be sour heavy oil that most refineries can't handle.

      They already start making excuses such as ~"West African light crude should be able to handle the missing Libyan oil".
        • 4 Years Ago

        "A Saudi oil ministry official said the kingdom, in coordination with OPEC members, was ready to cover cuts from Libya. "We have a surplus of 2.5 million barrels a day," the official said on condition of anonymity in line with regulations."

        They don't have 4 mbpd of spare capacity.
      • 4 Years Ago
      I wonder if this means gas prices are going to drop???

        • 4 Years Ago
        All that overtime means they're going to have to raise the prices.

      • 4 Years Ago
      Traditionally oil fields peak then go into a long slow decline. Modern advanced techniques can boost the total amount of oil that can be extracted. This can make the peak turn into a plateau and mask the fact that a peak has occurred. One side effect is that when the decline finally starts, it is much steeper than it was with the old production methods. So, this is a potentially scary situation; a "stealthy" peak, followed be a sudden, steep decline. It might be a wild ride over of the next 10 years or so. Or maybe I'm wrong and everything will be fine. We'll know soon enough.
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