Saudi announces a big increase in oil production...

[6SpeedTA95]

Saudi Arabia to produce more oil
World's largest oil producer says it will increase daily oil production to 9.7 million barrels from 9 million in July.

JEDDAH, Saudi Arabia (CNN) -- Saudi King Abdullah confirmed Sunday that his country will increase daily oil production to 9.7 million barrels from 9 million to counter the sharp rise in international oil prices.

The Saudi petroleum minister, Ali I. Al-Naimi, said the country will reach the 9.7 million level by July. The announcement comes after Saudi officials had announced modest increases.

It would be Saudi Arabia's highest production rate since 1981.

White House Deputy Press Secretary Tony Fratto praised the step. "Any increase in production in today's oil market is welcome," Fratto. "It is important that we also take steps to increase domestic production and our refining capacity."

Al-Naimi also said the Saudi government will invest in oil projects that would allow Saudi Arabia to have the capacity to produce 12.5 million barrels per day by the end of next year.

King Abdullah's announcement came at the end of the Jeddah energy summit, where he also called for OPEC to set aside $1 billion for a strategy to ease the oil price crisis. He said $500 million should be given to developing nations to help them get the energy they need.

King Abdullah said there are "many factors that made oil prices high." Along with increased demand, he also cited oil speculators and an increase in taxes in consumer nations.

The pain of escalating oil prices - crude sold for more than $134 a barrel on Friday, double year-ago levels - have cascaded throughout the U.S. economy.

Oil has become a hot-button political issue as the cost of gasoline, diesel and jet fuel have spiked in recent months. Congress has scheduled hearings this week to debate legislation that would attempt to dampen prices.

Bodman: Don't blame speculators

On Saturday, U.S. Energy Secretary Samuel Bodman, attending the Saudi summit, attributed the record-high oil prices to lagging production.

Bodman said he did not believe speculators are the cause of high oil prices.

Since 2003, he said, global demand for oil has increased because of industry in China, India and the Middle East. But from 2005 to 2007, there was very little increase in supply.

Nations need an additional supply of energy to market, whether that energy is nuclear, coal, fossil fuels, solar or wind power, Bodman said.

"We spent 30 years digging ourselves into this hole," Bodman said. "It won't be solved soon."

World leaders address supply and demand

British Prime Minister Gordon Brown and Chinese Vice President Xi Jinping both said during speeches at the summit Sunday that their countries need to find ways to bolster production of alternative forms of energy.

"The high price in increases of oil has affected the international economy and has brought tension in the international community," Xi said.

Earlier in the week, President Bush asked Congress to permit drilling for oil in deep water off America's coasts to combat rising oil and gas prices.

"There is no excuse for delay," the president said Wednesday.

Bush also renewed his request that Congress allow drilling in Alaska's Arctic National Wildlife Refuge, or ANWR, clear the way for more refineries and encourage efforts to recover oil from shale in areas such as the Green River Basin of Colorado, Utah and Wyoming.

I was really hoping Saudi would increase production to 10 million barrels a day, this is a pyschological breaking point for many traders that have been betting that Saudi either wont or can't increase production to 10M+ per day.

However, with new investments in infrastructure and production capacity Saudi should be able to pump 12.5M bpd by the end of next year and by 2012 as much as 15M bpd. While these increases aren't quite enough to keep up with demand expectations over the coming years it goes a long ways towards helping the problem. If the US would get off its ass and go after some of our own energy we could have a substantial impact on world oil prices. Otherwise the supply/demand gap will continue to widen. Projections at 2015 at this point are scary but there is some hope. It looks like a major refinery expansion was approved in Tulsa, another in the Dakota's and yet another in Michigan. IF we can keep production/pumping up to levels necessary coupled with these new but currently unneeded increases in refining prices could moderate substantially in the coming years.


Saudis increase oil production - Jun. 22, 2008

[Rouger2]

What can you say but that it's great news. A little help here, a little help there, and we just might get the price of gas to come down, but we must still work hard to use alternative sources of energy where we can, and to conserve energy, and to use less oil.

[Kytro]

Originally Posted by Rouger2

What can you say but that it's great news. A little help here, a little help there, and we just might get the price of gas to come down, but we must still work hard to use alternative sources of energy where we can, and to conserve energy, and to use less oil.

It really is only delaying the inevitable though.

[driller80545]

but us refineries are operating at 89% of capacity today.

[motivez]

That's good news, but unless the dollar starts to recover I don't see it helping all that much in the long term honestly. With a weak USD, it's going to be more expensive to buy it.

[avsp]

I dont want oil/petrol prices to fall, ..., although the effects on the world poor arent to be welcomed.

Given the scale of investment required to avoid an energy gap its probabvly a good thing that oil prices stay high, not just to provide the direct funds for investment but also to attract the required credit too.

It'll also help spur oil substitution efforts with wind, nuke, solar etc.

Also it'll help curb consumption too.

Personally I think the additional psychological effect of cutting the pointless mindlessly acquisitive consumption in 'the west' would be a good thing 'spritually', ..., but words disobey me in framing this point adequately

Besides which its hardly a 'big' rise either, but I suppose thats another personal thing

[6SpeedTA95]

Originally Posted by motivez

That's good news, but unless the dollar starts to recover I don't see it helping all that much in the long term honestly. With a weak USD, it's going to be more expensive to buy it.

Thats an excellent point. I dont see a real dollar rebound until 2009 when rates start rebounding a bit.

But if Nigeria could ever get their shit worked out and US Oil Companies get some HUGE leases in Iraq prices could fall rapidly once they start falling. Rumor is all four of the US oil companies are currently working on 100 year leases because Iraq's state owned oil company can not explore and produce effeciently. Iraq is also has some of the largest unexplored lands on the planet. If our companies get 100 year leases that could be huge.

[ballz2wallz]

OPEC says prices won't come down despite higher output.

Oil prices won't come down: OPEC president

[6SpeedTA95]

Originally Posted by Nurse Betty

OPEC says prices won't come down despite higher output.

Oil prices won't come down: OPEC president

He also said prices wouldn't get above 80 bucks a barrell

[motivez]

Prices went up despite this news because they expected them to break some production barrier that they've so far been unable to

Dollar looks like it's starting to try to make a bit of a comeback vs the Euro though, I think that'll do a lot to help costs