Saudi Arabia not to change oil strategy despite Iran’s return
Baku, Azerbaijan, Dec. 18
By Aygun Badalova - Trend:
Saudi Arabia will not change its strategy of defending its oil market share, despite Iran's return, Jason Tuvey, Middle East Economist at British economic research and consulting company Capital Economics believes.
"The return of Iranian oil to the market is unlikely to prompt Saudi Arabia to abandon its oil market strategy," Tuvey said in a report, obtained by Trend.
Ira hopes to increase its oil production by 500,000 barrels per day immediately after the international sanctions' removal.
The country's current oil production is estimated to be around 2.8 million barrels per day, of which about one million barrels are exported.
Tuvey, nevertheless, believes the return of Iranian oil will limit the scope for Saudi Arabia to raise output further, removing a prop to growth.
Earlier Tuvey said that compared to other major oil producers, Saudi Arabia is in a strong position to weather low oil prices, and so it can afford to take a long-term view of the oil market.
However, Tuvey's forecast is that the country's GDP will slow to around 1.0-1.5 percent in 2016-17.
Saudi Arabia, by producing 10.25 million barrels per day of oil in the third quarter of 2015, ranks first among OPEC member countries in terms of crude production.
OPEC's crude oil production increased to 31.5 million barrels per day during last two years, 1.5 million barrels per day more than the determined 30 million barrels per day.
OPEC members failed to reach an agreement on production ceiling on Dec. 4.
Saudi Arabia is one of the OPEC members that have seized the moment to produce more than their quota as Iran's production has shrunken under sanctions.
Saudi Oil Minister Ali bin Ibrahim Al-Naimi rejected Iran's demand for cooperation by saying that the market can absorb Iran's surplus production and OPEC members do not need to reduce their output.