Saudi Arabia probably should reduce production of oil stronger, than she promised OPEC. As predicts investment bank Morgan Stanley, Riyadh can reduce oil production to 9,5 million barrels a day or is even more considerable, instead of 10,06 million barrels stipulated by the agreement of the countries of exporters of oil.
According to analysts, such succession of events is probable in case of the worst scenario of development of the situation in the oil market. Oil production in October (level from which the petromanufacturing countries reckon to oil production reduction) made 10,54 million at Saudi Arabia.
As writes Bloomberg, referring to the report of Morgan Stanley, thus the country sacrifices export which can fall lower than 7 million barrels a day. In October deliveries of Saudi Arabia to foreign markets made 7,6 million barrels a day.
Experts of investment bank consider that to cartel lower than 33 million barrels a day will be difficult to keep production level in the first half of the year 2017 therefore Riyadh should “be cut down” stronger, and Libya and Nigeria freed from reduction won’t be able to increase export.
We will remind that for the purpose of stabilization of the market of energy resources the manufacturing countries of oil agreed to reduce oil production by 1,8 million barrels a day. And, 1,2 million from them is necessary on the OPEC countries, other nearly 600 thousand – on the oil-extracting states which aren’t entering into cartel. Russia undertook “to cut down” oil production on 300 thousand barrels from October levels.
Also, Riyadh left policy of dumping in the market of Europe which I practiced since the end of 2015. According to the prices exposed for January-2016 of year, the Saudi Arabian Oil Co state corporation reduces the power raw materials price for the USA and Asia, but increases the cost of “black gold” for the EU. Increase in prices will make from 20 to 80 cents for barrel depending on an oil grade. Reduction of prices for consumers will make from 60 to 1,5 dollars for barrel of Asia.
We will note that falling of the oil prices in 2014-2015 affected revenues of the budget of Riyadh. 2015 the country completed with the deficit which broke all records – 98 billion dollars.
Assuming that the high prices of oil will return at a distant day and also trying to be reinsured from similar collapses further, Saudi Arabia prepared the 15-year plan of transition of economy for new level for the purpose of its diversification.
According to the document, not oil revenues by 2020 have to reach 141 billion dollars while in 2015 they made 43,6 billion.