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OffbeatSaudis consider a world without OPEC

22:20  08 november  2018
22:20  08 november  2018 Source:   online.wsj.com

Oil rises after Saudi Arabia paves way for output cut

Oil rises after Saudi Arabia paves way for output cut Oil rose by more than 1 percent Monday, set for its largest one-day increase in a month after Saudi Arabia said OPEC and its partners believed demand was softening enough to warrant an output cut of 1 million barrels per day.

Saudi officials assured world markets that they would continue to pump as much oil as needed. The Saudi view is that lowering prices moderately now will shore up the world economy and prevent a “Clearly, other OPEC members are not going to trim their own production without Saudi Arabia

Saudi Arabia, which pumps about 40 percent of OPEC 's daily production, has been keeping production high to force price restraint on other cartel members. The Saudis believe their colleagues have underestimated the long-range impact of conservation and conversion to other energy sources, which

Saudi Arabia’s top government-funded think tank is studying the possible effects on oil markets of a breakup of OPEC, a remarkable research effort for a country that has dominated the oil cartel for nearly 60 years.

The effort coincides with new pressures on the Saudi government, including from the U.S., where President Trump has accused the cartel of pushing up oil prices, and from investors who distanced themselves from the kingdom after the brutal killing of a U.S.-based Saudi journalist.

Crude sinks as swelling US inventories outweigh OPEC plans

Crude sinks as swelling US inventories outweigh OPEC plans Oil fell to the lowest level since March after a U.S. government report showed the seventh straight weekly increase in domestic crude stockpiles and a jump in production. Futures in New York dropped 0.9 percent Wednesday, extending the longest streak of losses since 2014. U.S. crude inventories gained 5.78 million barrels last week, according to the Energy Information Administration. Prices climbed earlier in the session on a report that OPEC and its allies are considering fresh production cuts.

The World Without OPEC . The Organization of the Petroleum Exporting Countries abandoned its role as swing producer at its November 2014 meeting. Here are six ways the oil market and industry have changed since then.

A World Without OPEC ? By Joe Nocera. Oct. Perhaps more important than the price increases themselves was the new world order the embargo signaled. Meanwhile, Saudi Arabia has made it clear that it is primarily concerned with not losing market share, so it will continue to pump out oil

While the think tank’s president, Adam Sieminski, said the study hadn’t been triggered by Mr. Trump’s statements, a senior adviser familiar with the project said it provided an opportunity to take into account the criticism from Washington. Depending on the findings, the study could offer a defense of the cartel and the Saudi role in it.

The research project doesn’t reflect an active debate inside the government over whether to leave the Organization of the Petroleum Exporting Countries in the near term, according to people familiar with the matter.

Senior Saudi officials see the study as a high priority economic-policy inquiry, according to these people. Mr. Sieminski said he ordered the study, and that the analysis isn’t unusual and explores topics his researchers normally delve into.

OPEC is now talking about moves to support oil prices

OPEC is now talking about moves to support oil prices OPEC is enduring one of the most head-spinning years in its history, swerving from cutting oil production to boosting it as quickly as possible. Now it’s talking about reversing course again. Ministers from the group gathering in Abu Dhabi this weekend will discuss the possibility of cutting production again next year, according to delegates, a move that would mark an abrupt end to six months of supply increases. The group is responding to a worrying prospect: Even though U.S.

Imagine a world without OPEC . This is what the sponsors of legislation introduced in both houses of Congress seem to want. Saudi Arabia had already reduced its oil production by 30 percent and, just as in 2016, was no longer prepared to shoulder alone the burden of balancing oil supply and demand.

Imagine a world without OPEC . This is what the sponsors of legislation introduced in both houses of This would be the world without OPEC . There could be no collective action to try to balance oil supply Saudi Arabia has said repeatedly that it wouldn't balance the market on its own and support

The report is part of a wider rethinking among senior government officials in Saudi Arabia about OPEC, according to the people familiar with the matter. Officials are grappling with the assumption—shared increasingly in the oil industry—that oil demand will one day peak, the senior Saudi adviser said.

In this context, the study is seen among senior officials as an exercise in gaming out how markets might react if demand falls so much that OPEC loses sway and disbands, the adviser said.

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For decades, Saudi Arabia and its fellow members have insisted the Organization of the Petroleum Exporting Countries is a crucial global economic institution—a forum by which big producers can mete out oil production to keep prices from getting too low or too high.

Critics have accused OPEC of manipulating oil prices at the expense of big oil-consuming economies such as the U.S., and Mr. Trump has been outspoken in his condemnation. A group of U.S. lawmakers has pushed legislation that would effectively label OPEC an illegal cartel.

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Top OPEC producer Saudi Arabia recruited Russia and other non- OPEC countries to help drain oversupply “ OPEC countries want to find a way to institutionalize this relationship rather than to have it be a one-shot deal.” “History shows that without a long-term, powerful, competent coherent

OPEC got closer to clinching a deal to supply the world with more oil on Thursday after Saudi Arabia proposed the 14-member oil cartel and its allies increase production by a combined 1 million barrels per day.

The proposed legislation, dubbed NOPEC, has withered during several U.S. administrations. Backers have said they think it might fare better under Mr. Trump.

“The kingdom knows demand for oil won’t last forever…so you need to think past OPEC,” the senior adviser said. “You also have a NOPEC act being considered” in Washington.

While there is no debate in the Saudi government about disbanding OPEC soon, senior government officials have recently started to question the longer-term rationale for the cartel because of the clout that Saudi Arabia and Russia alone can have on markets, according to another senior Saudi adviser.

Those questions have grown as Russia has worked more closely with Saudi Arabia in recent years. Russia and a group of allied oil producers joined OPEC in a deal about two years ago to rein in oil production amid superlow prices. The combined group’s leverage over global production succeeded in lifting prices—so much so that the group more recently agreed to open the taps again to cool them off. The two sides are slated to meet again this weekend in Abu Dhabi.

Oil extends record losing streak as Trump blasts Saudi plan

Oil extends record losing streak as Trump blasts Saudi plan Oil fell for a 12th day, its longest losing streak on record, after U.S. President Donald Trump criticized Saudi Arabia’s plan to cut output. West Texas Intermediate futures in New York sank as much as 2.8 percent, extending a drop of more than 11 percent since Oct. 26. Prices “should be much lower based on supply,” Trump said in a tweet, after Saudi Energy Minister Khalid Al-Falih said producers need to cut about 1 million barrels a day. Meanwhile, OPEC estimated that demand for its own crude will fall even faster than expected in 2019 as a slowing global economy crimps demand and rival supplies surge.

OPEC ministers will meet in Vienna on Thursday, and expectations for any meaningful agreement to reduce production are low. At the April meeting, Saudi Arabia refused to move forward on a deal without Iran, which was bent on getting ready to export oil after the removal of economic sanctions

Note: OPEC member Iran was allowed to boost output slightly under the production deal and therefore is not listed in individual country data in this Saudi Arabia in September pumped 10.5 million barrels a day, its highest since the start of the curbs, according to the Organization of Petroleum Exporting

Despite the impact on global markets, the closer coordination has upset some OPEC members, who have complained they are being sidelined by decision makers in Riyadh and Moscow.

Spokesmen for the Saudi government energy ministry didn’t answer requests for comment.

The think tank, Riyadh-based King Abdullah Petroleum Studies and Research Center, or Kapsarc, bills itself as an independent research institution. Its staff advises dominant Saudi agencies such as Saudi Aramco and the Saudi energy ministry.

Mr. Sieminski said the study was building on previous research that looked at the role of OPEC’s spare capacity in stabilizing oil markets. The earlier work concluded that the absence of such a cushion “would lead to a more volatile price environment and be negative for the global economy,” he said.

The research project comes as Crown Prince Mohammed bin Salman, who has broad control running the kingdom, has pushed in several directions to reshape his country’s economy, society and its wider role in the world. Prince Mohammed pushed an initial public offering of a slice of Saudi Aramco, the country’s state owned oil company—an effort that people familiar with the matter say has since stalled.

The IPO plan was a pillar in what the crown prince has called a bigger plan to modernize the Saudi economy. He has pushed big investments in global technology and finance, while the country has tried hard to lure foreign investors into the kingdom.

Saudi readies to boost supplies over Iran oil sanctions

Saudi readies to boost supplies over Iran oil sanctions With Washington poised to curtail Iran's oil exports, OPEC heavyweight Saudi Arabia and its partners stand ready to ramp up supplies even as market conditions remain uncertain, analysts say. require(["medianetNativeAdOnArticle"], function (medianetNativeAdOnArticle) { medianetNativeAdOnArticle.getMedianetNativeAds(true); }); The renewal of sanctions on the Islamic republic comes at a time of major supply disruptions in several producer nations and as US President Donald Trump aims to prevent an oil price hike. Analysts expect that Iran's oil exports, which reach around 2.

Saudi Arabia possesses around 18 per cent of the world ’s proven petroleum reserves and ranks as the largest exporter of petroleum . The Sovereign is the Custodian of the Two Holy Mosques, HM King Salman Bin Abdulaziz Al-Saud. Saudi Arabia is a Founder Member of OPEC .

Asian countries will remain the key source of oil demand increase in the developing world , with China and OPEC has both the capability and the will to do this. [Slide 12] Around four-fifths of the world ’s proven To appreciate the significance of all this, one must consider investment lead times that are

Those plans have been complicated after Turkey reported the killing of dissident Jamal Khashoggi at the Saudi consulate in Istanbul, and later said Saudi officials “at the highest levels” were behind it. Saudi Arabia has claimed rogue elements killed Mr. Khashoggi, without the knowledge of the crown prince.

The OPEC study aims to “assess the short/medium-term consequences of a dissolution of OPEC,” according to an overview reviewed by The Wall Street Journal. It is intended to determine how the global oil market, and Saudi finances, would look “if coordination between oil producing countries disappear,” according to the overview.

The overview describes two scenarios to investigate, if OPEC isn’t in the picture: 1. All big oil producers, including Saudi Arabia, act competitively—fighting each other for market share; 2. Saudi Arabia, instead, attempts to leverage its massive oil output alone to help balance global supply and demand in an attempt to keep oil prices steady—similar to the role that members say OPEC plays today.

Two prominent Saudi government advisers, both central to the formation of the kingdom’s oil policy, are scheduled to meet researchers on the project weekly, according to the overview. Mr. Sieminski said contacts with the Saudi energy ministry were to provide data for the study.

The study comes at a time of particularly acute tensions inside OPEC, a fractious group on the best of days. Relations between longtime regional rivals Saudi Arabia and Iran, two of the group’s most important members, have spilled into oil-policy deliberations at the Vienna-based cartel.

Saudi Arabia is by far the most important OPEC member, accounting for more than 10 million barrels a day of the group’s collective 33 million barrels a day of output. Saudi Arabia’s oil minister has long presided over the group as its de facto head.

The kingdom has tended to play down publicly its leadership role, emphasizing what it and fellow members say is the group’s consensus-driven decision making process. That has given individual members, including Saudi Arabia, some degree of cover from critics.

U.S. sanctions targeting Iranian oil exports have inflamed recent OPEC debates, with Iran’s delegation accusing Riyadh of doing America’s bidding inside the cartel. Saudi Arabian officials have expressed exasperation at times at what they call Iran’s intransigence during what is supposed to be nonpolitical, oil-market debates.

Saudis Close to Crown Prince Discussed Assassinating Enemies a Year Before Khashoggi Killing.
During discussions in Riyadh in 2017, Saudi intelligence officials discussed hiring private companies to kill the head of Iran’s Quds force and other Iranian operatives.

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