SA is doing it to maintain market share. They didn't increase production. World production is at a high and then last month a bunch of Libyan production that had been off-line came back on adding approximately another 500MMBBL/Day. The Saudis, rather than cut production and defend pricing chose to cut prices and defend market share. The headline for the OP is misleading.

This post was edited on 10/13/14 at 1:30 pm

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Posted by LSUFanHouston

NOLA

Member since Jul 2009

37333 posts

Posted on 10/13/14 at 1:55 pm to cwill

High price of oil encourages new market participants and new areas. It also encourages alternative energy sources. Both of these things are not kind to the long term economy of SA.

For a while, OPEC had us over a barrel (LOL) when it comes to oil. We had no other choice. Well, now, we have choices. OPEC knows they need to be competative.

So, they want to find the sweet spot - allow them to maximize profits, but not so high that it encourages competition.

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Posted by TigerDog83

Member since Oct 2005

8348 posts

Posted on 10/13/14 at 2:24 pm to cwill

quote:
SA is doing it to maintain market share. They didn't increase production.

With the age of Ghawar and Safaniya the question that should be asked is can SA maintain the production level they are at for much longer? While some of the predictions about their true reserves were too alarmist feeding the peak oil crowd rig count alone over the last few years tells you oil is getting more capital intensive even for the Saudis.

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