Saudi Arabia Boosts Oil Output

[Rearden]

Saudi Arabia’s decision to increase its oil production after intense US pressure threatens to deepen the rift that has emerged inside Opec between the moderate Arab Gulf countries and hawkish Iran and Venezuela.

Analysts said the move was linked to George W. Bush’s personal plea for more oil – the second this year – and threats from leading US senators that they would try to stop a $1.4bn (£717m) arms sale to Saudi Arabia.

http://www.ft.com/cms/s/0/059a9de2-23a1-11dd-b214-000077b07658,dwp_uuid=f2b40164-cfea-11dc-9309-0000779fd2ac.html?nclick_check=1

Originally Posted by jyl

I don't understand why Bush would so publicly go hat in hand to personally beg for increased Saudi production, just to get a humiliating public rejection.

We're supposed to have close ties to the Saudis - surely the Administration could make the request and get the answer, privately, rather than publicly demonstrating its powerlessness?

Originally Posted by Shaun 84 Targa

I thought the very same thing. My only guess was he thought that if it were done publicly, the Saudi's wouldn't say no. cause we're a superpower and all you know.

Originally Posted by Superman

It is shamefully easy to point out the "president"s shortcomings but I happened to read in the paper just this morning:

1) Dubya's frustrated-sounding speech as he returned from his 3-day 100% failure trip to the Middle East.

[Mule]

Wow, first good news of any kind on this front in some time.

[Tobra]

Inconceivable!

[WolfeMacleod]

As I see it, it was the US that made Saudi Arabia an oil-rich $$$$ country in the first place.

Thos bastages owe us.

(or should I say "own?")

[Jim Richards]

Anyone have a good breakfast recipe for crow?

[widgeon13]

Let's see if it has any impact on gas prices?? Refinery capacity will be the issue now.....

I'm not expecting Christmas in July.

[Shaun @ Tru6]

oh lordy!

Bloomberg covered this on the 16th. Please take note of the May 10 timing.

Saudi Arabia Says It Will Boost Oil Output in June (Update5)

By Janine Zacharia

May 16 (Bloomberg) -- Saudi Arabia, the world's largest oil exporter, will increase crude production next month in response to rising demand from its customers and a request by U.S. President George W. Bush to ease the strain of record prices.

The country will raise output by 300,000 barrels a day, or 3.3 percent, to 9.45 million barrels a day in June, Saudi Oil Minister Ali al-Naimi said in Riyadh today, following a meeting between Bush and Saudi Arabia's King Abdullah.

``The president has asked the Saudis to produce oil to meet demand,'' Tony Fratto, a White House spokesman, said in Riyadh after Naimi's remarks. ``He was reassured by the king that they have increased production as the market demands.''

Crude oil futures traded in New York rose to a record about one hour after Bush landed in Saudi Arabia today. They later settled at $126.29, an increase of $2.17, or 1.7 percent, though below the day's high after the promise to boost production. Saudi Arabia is the world's largest oil exporter and the most influential member of OPEC.

``It's just a token increase but it shows that the Saudis realize just how important it is for the president to not come back empty handed,'' said Peter Beutel, president of Cameron Hanover Inc. in New Canaan, Connecticut. ``This is about a lot more than oil. The special relationship between the countries is at stake.''

Earlier today, before Naimi's remarks, U.S. National Security Adviser Stephen Hadley said the Saudi policy was to supply extra oil only if customers needed it.

Saudi Increase

``On May 10 we increased our response to our customers by 300,000 barrels because they asked for it,'' al-Naimi said later. ``So our production for June will be 9.45 million barrels per day. This is the request of about 50 customers worldwide.''

In another sign of cooperation, Saudi Aramco, the kingdom's state-run oil company, and U.S.-based ConocoPhillips said they will build and own a 400,000 barrel-a-day refinery in Yanbu on the Saudi Red Sea Coast, to be completed by 2013.

Oil prices have doubled in the past year on surging demand, supply disruptions in places such as Nigeria and commodity purchases by investors as a hedge against a weakening U.S. dollar. The price surge threatens to accelerate inflation and curb economic growth.

``The Saudis have engineered this to make it look like they're doing something to help, but the market is rightfully skeptical,'' said Robert Laughlin, a senior broker at MF Global Ltd. in London.

Filling the Gap

``As far as the U.S. is concerned, most of the 300,000 came from the U.S. and we responded to it on May 10,'' al-Naimi said, referring to the kingdom's production increase. Saudi Arabia is making up for output losses from other countries, such as Nigeria, Venezuela and Mexico, he said.

Production from the 13 members of the Organization of Petroleum Exporting Countries fell by about 390,000 barrels a day in April, to 31.7 million barrels a day, largely because of declines in Nigeria, according to a monthly report yesterday from OPEC's secretariat, which cited estimates from secondary sources.

Some Nigeria production was lost because of a strike at Exxon Mobil Corp.'s facilities and because of militant attacks on Royal Dutch Shell Plc pipelines. The West African nation is usually one of the largest crude suppliers to the U.S.

Saudi Production

The same OPEC report said Saudi Arabia's April production was 9.02 million barrels a day, down 37,000 barrels a day from a month earlier. Nigeria's output fell by 251,000 barrels a day. The Saudi supply increase will offset declines last month, MF Global's Laughlin said.

The Saudi oil minister said Bush was satisfied ``because our response is positive. If you want to move more oil you need a buyer,'' al-Naimi said at a press conference at the Saudi foreign ministry in Riyadh.

OPEC, which pumps more than 40 percent of the world's oil, has kept output targets unchanged during its past three meetings, on March 5, Feb. 1 and Dec. 5.

``I don't think there is a need for more oil'' from OPEC, Qatari Oil Minister Abdullah al-Attiyah said in a telephone interview. ``My customers aren't asking for more oil.''

The Qatari minister said recent reports from the International Energy Agency have shown reductions in demand forecasts and added that there is ``no need'' for OPEC to meet before its next scheduled conference on Sept. 9.

He declined to comment on Saudi Arabia's statement, saying it was a ``sovereign'' decision.

``This is good news for world oil markets and good news for President Bush, who appears to have used his personal relationship with King Abdullah to overcome Saudi reluctance to raise oil production and put downward pressure on world oil prices,'' said Jim Phillips, a Middle East analyst at the Heritage Foundation in Washington.

Saudi Arabia plans to boost oil production capacity to 12.5 million barrels a day by 2009, Naimi said, reiterating previous comments.

To contact the reporters on this story: Janine Zacharia in Riyadh at jzacharia@bloomberg.net.

[Shaun @ Tru6]

Reuters as well.

Saudis slightly boost oil output as Bush visits

By Tabassum Zakaria and Matt Spetalnick Fri May 16, 6:15 PM ET

RIYADH (Reuters) - Saudi Arabia announced a modest increase in oil output on Friday after an appeal from visiting President George W. Bush but the news did little to douse prices that hit a new record earlier in the day.


On his second visit to the world's biggest oil-exporter this year, Bush renewed his call for OPEC to increase production amid rising pressure at home to take action as soaring fuel prices weigh on the U.S. economy.

Saudi Arabia said it had raised output by 3.3 percent last week, and was willing and able to raise output further but saw no customer demand.

"Customers, where are you? I want to sell oil but where are the customers? I can't sell oil just to be stored at sea," Saudi Foreign Minister Prince Saud al-Faisal told a news conference.

Asked about Bush's response, Prince Saud said: "He was satisfied."

Saudi Oil Minister Ali al-Naimi told U.S. officials that increased output would not reduce costs at the pump for U.S. motorists as soaring prices were mainly the result of a weak dollar, speculation and tensions in oil-producing countries.

[Shaun @ Tru6]

Fox News covered it this way:

Bush: Saudi Oil Boost 'Doesn't Solve Our Problem'

Saturday , May 17, 2008

SHARM EL-SHEIK, Egypt —
President Bush said Saudi Arabia's small increase in oil production will not solve soaring U.S. fuel prices, but he defended the wealthy kingdom Saturday against American lawmakers "screaming the loudest" for Riyadh to open its spigots.

Bush also encountered bitter Arab criticism that he favors Israel too heavily and was bluntly questioned by Egyptian President Hosni Mubarak about whether he is serious about peacemaking. Bush said he was "absolutely committed" to reaching an Israeli-Palestinian agreement by the end of his presidency next January.

• Click here to view photos.

But there was no sign during Bush's five-day Mideast trip that the two sides are moving closer toward an accord.

"It breaks my heart to see the vast potential of the Palestinian people really wasted," Bush said. Pledging the creation of an independent homeland, Bush said "It'll be an opportunity to end the suffering that takes place in the Palestinian territories."

With Israel's occupation of Arab lands captured in the 1967 Mideast war entering its fifth decade, most Palestinians live in dire poverty.

On the last stop of his travels, Bush held a rapid-fire series of diplomatic meetings at this posh Red Sea resort, famous for its brilliantly clear waters and sea-snorkling reefs. After talks with Mubarak, Bush saw Afghan President Hamid Karzai and had dinner with Palestinian President Mahmoud Abbas. On Sunday, he will confer with the leaders of Pakistan, Jordan, Iraq. He said every meeting advances prospects for peace.

As oil prices hit another record high on Friday, Saudi King Abdullah rebuffed Bush's request for higher oil production to take the pressure off prices. The high prices are a political nightmare in a presidential election year for Bush and his would-be Republican successor, Sen. John McCain. Bush said he cautioned the king about the repercussions of skyrocketing prices.

"I said very plainly, I said, `You've got to be concerned about the effects of high oil prices on some of the biggest customers in the world. And not only that, of course, high energy prices (are) going to cause countries like mine to accelerate our move toward alternative energy."

Saudi officials said the kingdom was pumping all the oil that its customers want and that production had been increased by 300,000 barrels a day earlier this month.

"It's something, but it doesn't solve our problem," Bush said. "Our problem in America gets solved when we aggressively go for domestic exploration. Our problem in America gets solved if we expand our refining capacity, promote nuclear energy, and continue our strategy for the advancement of alternative energies, as well as conservation."

Rather than criticize the Saudis, Bush turned his fire on Democrats back home threatening to kill a $1.4 billion arms sale to Riyadh unless it pumps at least 1 million additional barrels a day.

"One of the interesting things about American politics these days is those who are screaming the loudest for increased production from Saudi Arabia are the very same people who are fighting the fiercest against domestic exploration, against the development of nuclear power, and against expanding refining capacity," Bush said, standing on a manicured lawn overlooking the sea after talks with Karzai.

The president's first appointment was with 80-year-old Mubarak, who has led an authoritarian government in Egypt since 1981. In unusually blunt criticism, Egypt's state-owned press attacked Bush for his speech Thursday before the Israeli Knesset. The media accused Bush of being overly supportive of the Israelis and not mentioning the Palestinians' plight.

"The Torah-inspired speech of Bush raised question marks over the credibility of the U.S. role in the Middle East," wrote Mursi Atallah, the publisher of Al-Ahram, the flagship daily of the state-owned press. "Bush aims to do nothing but appeasing Israel."

Bush, in his address Thursday, showered Israel with praise, strongly reiterated its right to defend itself and only gently urged leaders to "make the hard choices necessary," without mention of concrete steps. He did not visit the Palestinian territories nor mention the Palestinians' plight. He spoke of them only in one sentence saying that Israel's 120th anniversary — in 2068 — would see it neighboring an independent Palestinian state.

Bush said Mubarak "wanted to make sure that my approach toward the Middle Eastern peace is firm, and that we work hard to get the Palestinian state defined." Bush said that "I believe we can get a state defined by the end of my presidency, and we'll work hard to achieve that objective."

He repeated those assurances later to Abbas. The Palestinian leader said that "we are working very seriously and very aggressively with the hope that we will be able to achieve this objective before the end of the year."

Bush said he and Abbas agreed on their concern about "radical elements undermining" the U.S.-backed government of Lebanese Prime Minister Fuad Saniora.

"This is a defining moment," he said. "It is a moment that requires us to stand strongly with the Saniora government and to support the Saniora government."

The militant group Hezbollah overran Beirut neighborhoods last week in protest of measures aimed at the group by Saniora's government, a display of power that shocked and concerned the West. The violence only ended when Lebanon's Cabinet reversed the measures and Saniora's government reached a deal with the Shiite militant group, which the U.S. considers a terrorist organization. Bush had planned to meet with Saniora in Egypt on Sunday, but the session was canceled.

[Mule]

I'm sure there's a point there somewhere.

[Shaun @ Tru6]

Originally Posted by widgeon13

Let's see if it has any impact on gas prices?? Refinery capacity will be the issue now.....

I'm not expecting Christmas in July.

3% in June?

Math is helpful here. let's say we get 30% of our oil from Saudi Arabia (I don't know what the actual # is, but 30 may be close). This means that if nothing happens between now and June in terms of speculators driving up the cost of oil, we could see a 1% decrease in the cost of gas.

I'm paying $4.79/gallon for the Honda. In June, I could be paying $4.74.

If a terrorist hits a refinery or a well at any time in June, I will be paying $5.24.

[Jim Richards]

Originally Posted by widgeon13

Let's see if it has any impact on gas prices?? Refinery capacity will be the issue now.....

I'm not expecting Christmas in July.

The CNN article I read during breakfast was saying it'll only have a mininimal effect (cents, not dollars). They also said that refinery capability was a big problem.

[Mule]

Originally Posted by Shaun 84 Targa

3% in June?

Math is helpful here. let's say we get 30% of our oil from Saudi Arabia (I don't know what the actual # is, but 30 may be close). This means that if nothing happens between now and June in terms of speculators driving up the cost of oil, we could see a 1% decrease in the cost of gas.

I'm paying $4.79/gallon for the Honda. In June, I could be paying $4.74.

If a terrorist hits a refinery or a well at any time in June, I will be paying $5.24.

Got the crystal ball fired up this morning 'eh?

[MRM]

It's not good news. We're putting pressure on Saudi Arabia for minimal short term gains, putting them in a bad position vis a vis their neighbors and competitors. We're making it look like moderate Arab states are lackeys of the US who will cave in to us whenever Bush asks them to dance, which raises resistance to America across the Middle East and strengthens the argument of countries like Venezuala and Iran, whoi have been saying this for years. All in return for a symbolic increase in production that will have no measurable effect on US consumer prices.

A better idea would be a foreign oil tax or any of a million ideas on developing real alternatives to imported oil. The problem is that these would be long term solutions that would take some real effort, but would pay off for decades. But our country is currently not looking beyond November or January.

[Shaun @ Tru6]

Originally Posted by MRM

It's not good news. We're putting pressure on Saudi Arabia for minimal short term gains, putting them in a bad position vis a vis their neighbors and competitors. We're making it look like moderate Arab states are lackeys of the US who will cave in to us whenever Bush asks them to dance, which raises resistance to America across the Middle East and strengthens the argument of countries like Venezuala and Iran, whoi have been saying this for years. All in return for a symbolic increase in production that will have no measurable effect on US consumer prices.

A better idea would be a foreign oil tax or any of a million ideas on developing real alternatives to imported oil. The problem is that these would be long term solutions that would take some real effort, but would pay off for decades. But our country is currently not looking beyond November or January.

The decision to raise output by a measly 3% was made on May 10. It was already a done deal. All spin now is just to save a little face for Bush who went in with a stacked deck and still had to fold. 3% increase is meaningless in the world market, even when it's SA.


``On May 10 we increased our response to our customers by 300,000 barrels because they asked for it,'' al-Naimi said later. ``So our production for June will be 9.45 million barrels per day. This is the request of about 50 customers worldwide.''

In another sign of cooperation, Saudi Aramco, the kingdom's state-run oil company, and U.S.-based ConocoPhillips said they will build and own a 400,000 barrel-a-day refinery in Yanbu on the Saudi Red Sea Coast, to be completed by 2013.

Oil prices have doubled in the past year on surging demand, supply disruptions in places such as Nigeria and commodity purchases by investors as a hedge against a weakening U.S. dollar. The price surge threatens to accelerate inflation and curb economic growth.

``The Saudis have engineered this to make it look like they're doing something to help, but the market is rightfully skeptical,'' said Robert Laughlin, a senior broker at MF Global Ltd. in London.

Filling the Gap

``As far as the U.S. is concerned, most of the 300,000 came from the U.S. and we responded to it on May 10,'' al-Naimi said, referring to the kingdom's production increase. Saudi Arabia is making up for output losses from other countries, such as Nigeria, Venezuela and Mexico, he said.

[Jim Richards]

Originally Posted by MRM

A better idea would be a foreign oil tax or any of a million ideas on developing real alternatives to imported oil. The problem is that these would be long term solutions that would take some real effort, but would pay off for decades. But our country is currently not looking beyond November or January.

Agreed, for the most part. The tax idea does send a shiver up my spine.

[The Gaijin]

They don't want to kill off the golden goose. Look what the oil shocks of the '70s did to the world economy.

Imported duties should be added to keep oil at $125 per barrel even if the price does drop. With an inflation + 5% increase every year after that.

Time to develop nuclear power and get serious about conservation.

[Mule]

I wish I could take credit for this but I read it elsewhere:

"Did ya ever get the feeling that if we used all forms of energies at our disposal, nuke, hydro-electric, fossil, wind, solar, coal, wave tech, geo-thermal and what ever else I'm forgetting, we would not have to import a single drop of oil???

Then we could put some of the savings into developing new forms of energy for the future, without cutting our balls off in the present."

First we'd have to put a boot in the asses of the Algore lefties. But I think that time is growing near.

[Jim Richards]

We do need to get going on non-oil energy production/transmission/distribution.

[Mule]

Nuke= Lefies hate it, Not in my backyard.
Hydroelectric= Lefties hate it, You'll kill the Snail darter.
Fossil= Lefties hate it, Global warming
Wind= Lefties hate it, (Ted Kennedy) The turbines ruin my view
Solar= It's ugly and ruins the aesthetics of my house.
Coal= Lefties hate it, It too dirty
Wave tech= Lefties hate it, It's ruining the beach and ocean eco system
Geothermal= Lefties hate it, You're cooling the earth's crust and we'll have global cooling


Are you starting to see a pattern here? How about this? We need energy independence way more than we need lefties. Let's drill, build, whatever. ***** the lefties!