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Ian R. Campbell  -  Mar 14 09:58 AM 66 Posts 1 Follower 0 Following
Saudi Arabia Next?

I think a recent article titled ‘Libya Bombs and Saudi Bribes’ – reading time 3 minutes – sets out a good summary of the significance of the 1.6 million barrels of light sweet crude Libya produces each day.  As the article puts it, a loss of Libya’s 1.6 million barrels per day isn’t good, but is not something that will lead to a collapse in supply.  The article implies that amount of oil supply would not be difficult to replace – Kuwait, Nigeria and The United Arab Emirates each have said they will increase production by 300,000 barrels per day, and the balance could come from Saudi Arabia.  However, not all of this oil is of the light sweet quality of the Libyan oil.  This means the average cost of refining would be higher – all of which is then reflected in gasoline pump prices.

 

That said, should societal issues arise in Saudi Arabia, who produces 9 million barrels per day, that would be a horse of a different colour that could spiral U.S. retail gasoline prices upward.  Only about 10 days ago it was reported the Saudi King introduced over U.S.$30 billion in welfare payments – hoping that would result in a populace that would not ‘take to the streets’ – hence the inclusion of the word ‘Bribes’ in the article’s title.  So the big question is, will the type of societal problems that have recently been ‘in vogue’ in Egypt, Libya, and Tunisia find their way into the Middle East – and in particular will they find their way to Saudi Arabia.

 

The article also notes that the U.S. Energy Information Administration (‘EIA’) recently increased its latest crude price forecast to average U.S.$105 in 2011.  If you are not familiar with the EIA website I suggest you visit and consider bookmarking it.  In my opinion is both easy to navigate and highly informative.
Topics:   Libya, Saudi Arabia, Kuwait, United Arab Emirates, gasoline price, societal issues, U.S. Energy Information Administration, oil supply
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