You will see Iraq`s output in this story telling Saudi to cut production as they wont, Saudi needs the money. Brent could drop to 88 a barrel and the story doesnt include the IF Iran settles thier issue how Brent crude could drop if Irans production came back on line full force as they need money,,,,,,,,,,, Iraq’s biggest jump in oil production since 1998 is increasing the burden on Saudi Arabia to lower crude exports to prevent price declines next year.
The kingdom curbed crude output in November to a 13-month low, according to OPEC. Iraq plans next year to pump as much as it did when Saddam Hussein came to power three decades ago, its oil minister said Dec. 9. Supply will also rise in Libya and Nigeria while the U.S. experiences an oil shale bonanza.
Ali al-Naimi, Saudi Arabia's oil minister, needs to keep prices high enough to fund social spending plans without incurring the wrath of consumers for hurting the global economy. Photographer: Vladimir Weiss/Bloomberg
Saudi Arabia reduced its output to 9.67 million barrels a day last month. Photographer: Phil Weymouth/Bloomberg
“Saudi Arabia’s dilemma is that while it is the key OPEC player willing to cut back oil production in order to sustain prices at desired levels, it is also accommodating Iraq’s rising output and market share,” said Julius Walker, global energy markets strategist at UBS Securities LLC in New York. “Ultimately, there will need to be an agreement between the two as how to balance these ambitions.”
Saudi Arabian Oil Minister Ali Al-Naimi needs to keep prices high enough to fund social spending plans without incurring the wrath of consumers for hurting the global economy. Iraq, now the second-biggest supplier in the Organization of Petroleum Exporting Countries, has a different priority: to rebuild its industry after decades of war and sanctions.
Arab states are spending billions of dollars on housing and local projects to allay popular unrest after uprisings toppled leaders in Libya, Egypt and Tunisia and sparked a civil war in Syria. Saudi Arabia has committed more than $600 billion in social and infrastructure projects in coming years.
Iraq’s production surged 650,000 barrels a day this year to 3.35 million, the biggest annual gain in 14 years, according to data compiled by Bloomberg, amid assistance from foreign oil companies that are paid a fixed amount per barrel produced, regardless of international price levels.
The Middle Eastern state plans to boost output to an average 3.7 million barrels a day in 2013 and at some point in the year match the 1979 record of 3.8 million, Oil Minister Abdul Kareem Al-Luaibi told reporters in Vienna on Dec. 9.
The nation has been free of strict OPEC quotas since 1998 and the resumption of any allocation is a “sovereign issue” rather than a decision to be made by an organization, Falah al- Amri, Iraq’s governor on the OPEC board, said on Dec. 12.
Brent crude traded as high as $109.48 a barrel today on the ICE Futures Europe exchange. It may sink to $88 by June if OPEC fails to rein back supply, according to Leo Drollas, chief economist at the London-based Centre for Global Energy Studies, which was founded by former Saudi Oil Minister Sheikh Ahmad Zaki Yamani in 1990.
interesting, but are you aware that Iran effectively controls Basra, which is in Iraq, through proxies? In all seriousness, Iran controls Iraq's oil supply. Then you have the Chinese and Indians right there willing to increase their oil consumption because the middle class is booming. 100 dollar oil will be a reality in 2 years.