Saudi Arabia Continues to Ramp Up Oil Output in Face of Market Glut
But the desert kingdom reportedly is working on a strategy to rework its economy in part through spending reforms and privatizing state-owned industries in an effort to weather what it sees as a temporary drop in oil’s value.
Crude exports from Saudi Arabia rose from an average of 7.111 million barrels per day in September to 7.364 million per day in October, according to the latest data from the Joint Organizations Data Initiative (JODI), which monitors the oil industry. The report said this quantity was the most oil exported from Saudi Arabia since June and 7 percent higher than in October 2014.
It was Saudi Arabia that persuaded OPEC in November 2014 not to lower its production ceiling from 30 million barrels a day to help shore up oil prices, and, on Dec. 4, 2015 to dispense with a ceiling altogether. This has been an effort to keep prices low enough temporarily to reclaim market share from rivals such as Russia and the United States, with higher-cost production technologies.
This has led to some financial pain for OPEC countries. Not only are less affluent OPEC members such as Venezuela hurt by the lower oil prices, but even rich Gulf States, including Saudi Arabia, began to feel the pinch almost immediately and revise the projected revenues of their budgets for the fiscal year 2015.
And on Oct. 30, the U.S. financial services company Standard & Poors (S&P), citing a “pronounced negative swing” in Saudi finances due to lower oil revenues, cut its rating of the Saudi sovereign debt to A+/A-1 from AA-/A-1+, and said its outlook for Saudi Arabia remains negative.
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