bloomberg | Not content with the blow it’s dealt to U.S. oil drillers, Saudi
Arabia is set to escalate the battle for market share by raising
production to maximum levels.
The world’s largest oil exporter has already increased output to a
30-year high of 10.3 million barrels a day in a bid to check growth from
nations including the U.S., Canada and Brazil. It will add even more to
the global glut, according to Goldman Sachs Group Inc. Citigroup Inc.
predicts the kingdom will push toward its maximum daily capacity, which
the bank estimates at about 11 million barrels, in the second half of
2015.
Saudi Arabia steered the Organization of Petroleum Exporting
Countries in November to protect its market share in the face of
swelling U.S. crude output, rather than cut supplies to shore up prices
as it did in the past. Having abandoned the role of swing supplier --
adjusting production in line with demand -- the kingdom will maximize
sales to increase pressure on producers outside the group, the banks
said.
“If you are Saudi Arabia and you’re looking at the new oil order we
live in, you would go to full capacity,” Jeff Currie, head of
commodities research at Goldman Sachs in New York, said by e-mail on
June 15. “The world has come around to the realization that the U.S.
shale barrel is the swing barrel.”
