Business | Oil & Gas
Saudis could cut crude output
A downside to declining crude prices could be lower oil supplies from Saudi Arabia, the world's biggest petroleum exporter, the US Energy Information Administration (EIA) said.
- Reuters
- Published: 23:42 August 21, 2008
Washington: A downside to declining crude prices could be lower oil supplies from Saudi Arabia, the world's biggest petroleum exporter, the US Energy Information Administration (EIA) said.
In response to high oil prices, Saudi Arabia boosted its oil output in July to 9.7 million barrels a day from 9.45 million barrels a day in June.
US oil prices have fallen $35 a barrel from a peak of $147 a barrel last month, and prices could go even lower as petroleum demand falls off after the summer vacation season.
"As prices drop, Saudi Arabia may cut back on its recent increase in production, which could halt the most recent price decline," the EIA said in its weekly review of the oil market.
While lower oil costs help family budgets and reduce business expenses, they hurt major oil producing nations who may try to cut output to make global supplies tighter and raise prices.
Saudi Arabia and fellow Opec member countries meet on September 9 in Vienna to set oil policy.
The EIA repeated its latest forecast that oil prices may settle in the $120 to $130 a barrel range for the rest of the year, "barring any additional major supply disruptions from hurricanes or other events such as the current conflict in Georgia."
The agency said its oil price estimate reflects that US oil demand will not be as large during the second of half of 2008.
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