Saudi Arabia to Go Slow on New Oil Output Production

Technocrat has this bit of news:

“Saudi Arabia has no intentions to increase production capacity beyond the increases they previously committed to, nothing extra in other words. Energy analysts are projecting world demands to be much higher, but the Saudis say that uncertain markets and biofuels will force them to not try and increase production to higher levels by investing billions more than what they think is necessary.”

Read the rest here.

This of course presumes that spare production capacity actually exists. It’s not clear to non-Saudi official spokespeople that it does. It’s been thought by a number of authors that Saudi has been effectively running the taps wide open for some time now taking advantage of the high oil prices in the global markets.

But either way, the upshot is that demand is increasing and there appears to be little hope that supply is going to be able to keep pace.

Which, according the most basic economic model of all, is a recipe for sustained rise in oil prices.

Author: Nicholas Knisely

Episcopal bishop, dad, astronomer, erstwhile dancer...