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Energy

Saudis Won’t Lower Production If Strategic Reserves Released

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By Paul Ausick Published
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US Secretary of State Hillary Clinton appears to have extracted a commitment from Saudi Arabia to continue the Kingdom’s crude oil production at its current level of around 9.9 million barrels/day even if the US, the UK, and France go ahead with a crude oil release from their strategic petroleum reserves. The Saudis are unlikely to have lowered either production or prices in any event, but they have agreed to continue meeting global demand regardless of reserve releases.

The Saudis understand, better than most US, UK, and French politicians, that a release from strategic reserves will not flow into the global market, but stay within the particular countries borders, and that no matter what, the releases will be temporary. Thus, the Saudis have no reason to lower either prices or production. They’ll just sell the black stuff at current prices and traders can sail the cargoes in circles until they find a buyer.

Paul Ausick

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About the Author Paul Ausick →

Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.

He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.

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