Saudi to go it alone, pump 10m bpd in July
Riyadh, June 11, 2011
Saudi Arabia will raise output to 10 million barrels a day in July, Saudi newspaper al-Hayat reported on Friday, as Riyadh goes it alone to pump more outside official policy of Organization of the Petroleum Exporting Countries (Opec).
Citing Opec and industry officials, the newspaper said output would rise from 8.8 million bpd in May. There was no immediate independent verification of the story.
The report suggests Riyadh is asserting its authority over fellow Opec members after it failed to convince the cartel to lift output at an acrimonious meeting in Vienna on Wednesday.
'The Saudi intention is to show that they cannot be pushed around,' said Middle East energy analyst Sam Ciszuk at IHS. 'Either Opec follows the Saudi lead or they will have problems.'
A proposal by Saudi and its Gulf allies - the UAE and Kuwait - to lift Opec production was blocked by seven producers including Iran, Venezuela and Algeria.
The two sides blamed each other for the breakdown in talks. Saudi Oil Minister Ali ali-Naimi called those opposed to the deal obstinate.
Iran's Opec governor Mohammad Ali Khatibi responded by saying Riyadh had been overly-influenced by US-led consumer country demands for cheaper fuel.
'The hawks in Opec called their bluff and now it is up to Riyadh to show that they were not bluffing - that they will go ahead unilaterally if pushed,' said Cizsuk.
It appears unlikely though that Saudi is preparing to flood the market and produce more than is required to meet demand, potentially sending oil prices plummeting.
New forecasts from te organisation headquarters released on Friday project demand for Opec's oil increasing about 1.7 million bpd in the second half of the year to 30.7 million bpd.
Saudi Arabia proposed to Opec that it raise production targets to 30.3 million bpd.
'Prices may moderate from where they would have been otherwise but it is not the intention of Saudi to use an oil weapon against Iran,' said David Kirsch at consultancy PFC Energy in Washington.
'They might be happy to see prices dip briefly but there is a broad consensus forming within Opec that $100 is the minimally acceptable long-term price.'
Brent crude rose to a 5-week high of $120 a barrel after the Opec talks broke down. Prices eased after Friday's Saudi news, dipping 45 cents to $119.12 a barrel.
Saudi Arabia has not pumped 10 million bpd for at least a decade, according to Reuters data, production having peaked at 9.7 million bpd in July 2008 after prices hit a record $147 a barrel. It is the only oil producer inside or outside Opec with any significant spare capacity.
Asked in Vienna on Thursday whether Saudi would reach 10 million bpd Naimi said: 'Just send the customers, don't worry about the volumes.'
Gulf delegates said Riyadh was planning to pump an average 9.5-9.7 million bpd in June.
Saudi is already offering more crude to refiners in Asia, which, led by China, is driving a global rise in oil consumption. European refiners said they need no more for now.-Reuters