Saudi Arabia’s Crude Oil Production Rose in May 2016
Saudi Arabia’s crude oil production
A Reuters survey reported that Saudi Arabia’s crude oil production rose by 10,000 barrels per day to 10.3 MMbpd (million barrels per day) in May 2016—compared to April 2016. Market surveys estimate that the crude oil production from Saudi Arabia could rise to 10.5 MMbpd in the short term. Its crude oil production hit the record level of 10.6 MMbpd in June 2015—its highest level since the 1980s.
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Saudi Arabia’s crude oil production expansion plans
Saudi Arabia will also complete the expansion work in its Shaybah oilfield by June 2016. This will increase the capacity of the oilfield from 0.75 MMbpd to 1 MMbpd. Saudi Arabia reported that it will maintain the crude production capacity of 12.5 MMbpd until 2020 under a new economic reform plan approved by the government on June 6, 2016. Why? Saudi Arabia doesn’t want to depend on economic growth driven by oil exports. So, it’s clear that Saudi Arabia won’t reduce its production and fight for market share.
Impact on energy producers and ETFs
The International Monetary Fund expects that Saudi Arabia’s oil production will average 10.3 MMbpd in 2017—compared to 10.2 MMbpd in 2016. The expectation of another rise in the crude oil production from Saudi Arabia will have a negative impact on crude oil prices. Low crude oil prices impact oil producers like Saudi Aramco, Bill Barrett (BBG), Halcon Resources (HK), and Bonanza Creek Energy (BCEI).
In the next part, we’ll look at Iran’s crude oil production.