Saudis “desperate” for a deal

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Source: Reuters.com | Thu Oct 27, 2016 | 9:35am EDT

As cracks emerge in global oil pact, Saudis may need to compromise.

OPEC agreed in Algeria last month on a modest oil-production cut in the first such pact since 2008, with the group’s top producer Saudi Arabia softening its stance on arch-rival Iran amid mounting pressure from low oil prices.

But cracks have surfaced in the Algiers agreement, which would reduce output to a range of 32.5-33 million barrels per day (bpd), and Saudi Arabia may have to offer a major concession if it wants to cement the accord.

Riyadh faces a second year of record budget deficits and is cutting the salaries of government employees, so keeping its output at current levels of 10.6-10.7 million bpd may not be economical.

Industry sources say Aramco cannot sustain such high output for long, as it sees 10.1-10.2 million bpd as a more comfortable level also for its oilfields and reservoir management.

Source article here

 

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